The Woolworths Group consists of complex businesses that are exposed to a range of strategic, financial, operational and compliance related risks that are inherent when operating in retail and online markets. The Group has an enterprise risk management framework which, together with corporate governance, provides a sound framework for managing the material risks.
The following table sets out material business risks (excluding generic risks in no particular order) that could adversely affect the Group’s financial performance. The Group’s performance could also be affected by other generic risks that apply to most businesses and Australian households (e.g. unfavourable changes to the macro-economic environment, climate change and emerging risks). Further information in relation to risk management can be found in the Corporate Governance Statement which is available on the Woolworths Group website.
RISK TYPE
The retail trading environment will continue to be competitive, driven by new entrants, technology disruption, as well as be affected by changing customer needs and expectations and other external and internal risk drivers. Failure to successfully respond to these factors, our competitors and the changing marketplace may adversely impact on market share and business performance. The Group is committed to delivering on our strategy through ongoing focus on our customers as well as transformation initiatives.
At the same time, we want to play our part in alleviating environmental pressures and promoting social responsibility. Focus areas include diversity, food waste, own brand packaging, ethical and sustainable sourcing and carbon emissions.
MITIGATION
- Woolworths Group has a board approved strategy driving a Customer 1st culture and investment in growth enablers, including our store network, technology and digital channels.
- Delivery offices have been established to drive transformation initiatives.
- We have combined our Digital, Loyalty and Data businesses into WooliesX, focused on delivering on our connected customer strategy.
- Our short and long-term incentive plans are aligned to our Customer 1st strategy.
- Our Corporate Responsibility Strategy 2020 identifies our goals to improve sustainability and minimise the environmental impact of our operations.
RISK TYPE
The availability of funding and management of capital and liquidity are important to fund the Group’s business operations and growth. In addition, a failure to turnaround our general merchandise business or materially adverse interest rates and foreign exchange rate fluctuations could impact on the business' profitability.
MITIGATION
- Woolworths Group has board approved treasury policies to govern the management of the Group’s financial risks, including liquidity, interest rate and foreign currency risks.
- We have a board approved turnaround plan for our general merchandise business which is monitored regularly and we anticipate the proposed sale of the Petrol business will further improve our capital position.
RISK TYPE
The Woolworths Group is subject to operational risk and could be exposed to events, including but not limited to, failures to meet people or product safety standards, information technology, security, asset, data breaches and business disruptions as a result of cyber attacks, natural disasters, weather conditions, industrial disputes, technology failures or supply chain interruptions.
MITIGATION
- Woolworths Group has established policies, standards and training regarding business operations, including people safety, health and wellbeing, food and product safety.
- We continue to invest in our operational capability across processes, technology and cyber security.
- A Business Resilience Framework is in place to manage our response to major operational incidents and/or business disruptions.
RISK TYPE
The Woolworths Group is subject to applicable laws, regulations and contractual arrangements and is exposed to adverse regulatory or legislative changes. Breaches or adverse changes could result in negative impacts on the Group’s reputation and profitability, significant fines or other adverse consequences.
MITIGATION
- Woolworths Group has a Compliance Framework in place and a variety of policies have been established to facilitate legal, regulatory compliance and internal protocols. We liaise with government and regulatory bodies on proposed legal and regulatory changes.
- The Woolworths Group Code of Conduct and training programs promote awareness of legal, regulatory and internal policy requirements.