Financial risks
Financial instruments | We use financial instruments in the normal course of our business and in mitigating risk. These instruments include share capital, receivables from and liabilities to (former) equity partners. |
Credit risk | Relates to losses that may be incurred if a client or counterparty defaults:
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Liquidity risk | Related to the firm being unable to meet its financial liabilities because of a lack of available liquidity:
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Market risk | Relates to changes in financial market prices adversely affecting the firm’s income or the value of its assets:
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During 2020/2021, none of the risks above had a significant or material impact on our financial performance. See our consolidated financial statements for further disclosures.
Strategic risks
The table below details our main strategic risks, their potential impact and the measures taken over the past year to prevent or mitigate these risks:
Strategic risk | Potential impact | Mitigation measures taken |
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Failing to comply with quality standards Failing, during engagement, to comply with applicable professional standards, resulting in litigation or regulatory action |
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Unfavourable or hostile political / media sentiment Failing to act following potentially damaging incident with respect to attitude towards clients, delivery of services, professional conduct or impact on society |
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Failing to meet expectations of external or internal regulators Failing to maintain constructive relations with regulators or to meet their expectations following inspection findings or potential non-compliance with laws and regulations |
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Failing to create a fast, innovation, collaborative, high-performance culture Inability to create or implement an effective corporate culture, with respect to quality or ethical behaviour, or an unwillingness to improve performance in critical areas of activity |
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Privacy breaches, loss of data or other technology risk Failing to protect personal or client data confidentiality – or business disruption as a result of technology failures or over-dependency |
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Redesign failure of previously competitive and profitable long-term business models Failing to align client base with strategy, ESG or brand positioning, unsuccessfully redesigning a profitable business model based on inappropriate metrics, or developing new assets and services that are illegal, unethical, or don’t comply with relevant professional standards or our own corporate values |
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Not responding to economic changes and /or increased competition from new business models Inability to respond quickly enough to changes in the economy, or increased competition from new, disruptive technologies |
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Attracting and retaining talent Failing to attract and retain talent because of high workloads, uncompetitive pay or a lack of career opportunities; Failing to train new and junior employees because of increase in remote working, or excessive focus on compliance rather than improving quality |
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Failure to implement strategy Failing to implement our Trust & Growth strategy in line with business planning |
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Fraud risk assessment
We estimate our fraud risk as relatively low; this is because preventing and detecting fraud is an inherent part of our business. We also know, from our risk assessments, that fraud risk may be detected because of its potentially significant impact on other enterprise risks. Even so, we recognise that fraud risk is structurally present in our business; we implement a range of measures to mitigate this risk. Essentially, these measures include having clear core values, policies, procedures, training, monitoring and reporting; in recent years, we have found these measures to be effective in reducing our ‘net risk’ to an acceptable level.