Given the scale of our businesses, the Board of directors recognises that the nature, scope and potential impact of our key business and strategic risks are subject to constant change. As such, the Board has implemented the necessary framework to ensure that it has sufficient visibility of the Group's key risks and the opportunity to regularly review the adequacy and effectiveness of our mitigating controls and strategies.
During the year the Board has also considered the nature and level of risk that we are prepared to accept in order to deliver our business strategies and has reviewed and approved our internal statement of risk appetite. This describes both the current and desired levels of acceptable risk, supported by high level qualitative risk statements, ensuring that risks are proactively managed to the level desired by the Board.
The Corporate governance report on page 45 of the 2013/14 Annual Report and Accounts describes the systems and processes through which the directors manage and mitigate risks. The Board considers that the principal risks to achieving its strategic aims are set out below.
Making it easier for our customers to improve their home
- Our 'Easier' initiatives fail to deliver demand and value due to a lack of rigorous change management disciplines, capabilities and resources.
Giving our customers more ways to shop
- Our investment in systems and supply chain platforms fails to deliver the anticipated benefits.
- As customers change the way they shop we fail to adapt our business model to these changes.
Building innovative common brands
- We fail to unlock the potential to generate further shareholder value through the optimisation of combined purchasing and commercial synergies, while retaining accountability at our Operating Companies.
- We fail to create enough innovation opportunities to sufficiently differentiate our product offer.
Growing our presence in existing markets
- Our investments in new store formats, customer markets and customer proposition strategies fail to stimulate increased consumer spend and do not deliver the desired like-for-like sales growth in our mature markets.
- Uncertainty surrounding the resilience of the global economy and volatility in the eurozone continues to impact both consumer confidence and the long-term sustainability and capabilities of our supplier base.
Expanding in new and developing markets
- Our investments in overseas expansion fail to deliver sufficient sales and profits.
Developing leaders and connecting people
- We do not make the necessary investment in our people to ensure that we have the appropriate calibre of staff, skills and experience.
Sustainability: Becoming Net Positive
- We fail to deliver our sustainability targets due to not integrating our sustainability plan into the day to day operations of the business.
- A lack of perceived price competitiveness, particularly when compared to more discount based or online competitors, would affect our ability to maintain or grow market share.
Key supplier resilience and continuity
- Key product suppliers lack the necessary resilience or disaster recovery capabilities to manage the impact of ongoing global economic volatility or the increasing impacts of extreme weather cycles and patterns on their operations and extended supply chains.
Health & safety
- We fail to maintain a safe environment for our customers and store colleagues, which results in a major incident or fatality that is directly attributable to a failure in our health and safety management systems.
Environmental or ethical failure
- Kingfisher's reputation and brand are affected by a major environmental or ethical failure, a significant corporate fraud or material noncompliance with legislative or regulatory requirements resulting in punitive or custodial procedures.