The Board of DCC is responsible for the Group’s risk management systems, which are designed to identify, manage and mitigate potential material risks to the achievement of the Group’s strategic and business objectives. Details of the Group’s risk management systems and internal controls are set out under ‘Internal Control’ in the Corporate Governance statement on pages 48 to 51.

 

Further detail on the principal risks facing the Group is set out below.

 

 

Strategic Risks		Impact		Mitigation
Global economic downturn		Demand for goods and services in the Group’s businesses will be impacted by the current economic downturn.		The Group has operations across a number of different markets. Whilst the current economic downturn will affect all businesses the impact will vary according to the markets in which they operate. The Group will focus on operating efficiencies and business development.
Competitor activity		The Group’s businesses face strong competition in their relevant markets. Failure to compete successfully will lead to a decline in market share and profitability.		Competitor activity is formally discussed at regular divisional board meetings. Subsidiary management are constantly focused on providing an efficient value added service to meet the demands of both customers and suppliers.
Acquisitions		Poor acquisition selection could lead to a loss of value. In addition a failure to properly integrate acquisitions could lead to operational and financial difficulties.		The Group conducts a stringent internal evaluation process prior to completing an acquisition. Only acquisitions which add value and are a strategic fit are considered. Group and subsidiary management have significant expertise in and experience of integrating acquisitions.

 

 

 

Operational Risks		Impact		Mitigation
Key supplier		The loss of a key supplier could have a serious operational and financial impact on the Group’s business.		The Group trades with a broad supplier base. Excellent commercial relationships exist with suppliers and there is a constant focus on providing a value added service.
Environmental, Health & Safety incident		A serious environmental, health & safety incident, particularly in the Energy or Environmental divisions, could endanger the lives of employees and seriously disrupt operations.		All Group subsidiaries operate EHS management systems appropriate to the nature and scale of their EHS risk profile. Identification of hazards, assessment of the risks and the introduction of control measures form the basis of these systems. Furthermore, monitoring, measurement and review of the control measures ensures a continuous improvement cycle is maintained.
Loss of major site		The loss or serious destruction of any one of the Group’s key sites would present significant financial and operational difficulties for the Group.		All Group subsidiaries have implemented business continuity plans to manage disruptions. An insurance cover programme is in place for all significant insurable risks and major catastrophes to mitigate the financial consequences.
Management resources		Strong and effective management has been fundamental to the Group’s success. The continued attraction, retention and motivation of high quality management throughout the Group is critical if this success is to continue.		The Group maintains a constant focus on succession planning, remuneration programmes, including long and short term incentive initiatives and management development. This focus is maintained through a structured review process in which Group Human Resources supports divisional management and the Chief Executive.
Product quality		The Group has certain subsidiaries which operate manufacturing or processing facilities. Poor product quality could have significant consequences for customer or public safety and lead to financial, operational and reputational difficulties for the Group.		All manufacturing and processing facilities operate quality management systems appropriate and specific to the nature of the products they manufacture or process.

 

 

 

Compliance Risks		Impact		Mitigation
Regulation		DCC has operations in 15 countries. Failure to comply with statutory obligations could result in regulatory action, legal liability and damage to the Group’s reputation.		All statutory requirements are managed by local management. Formal confirmation of compliance with statutory and other obligations is received by the Compliance Officer of DCC plc twice a year.

 

 

 

Financial Risks
The principal financial risks facing the Group are addressed in detail under ‘Financial Risk Management’ in the Financial Review on pages 34 to 39.