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Risk management.

The Board routinely monitors risks that could materially and adversely affect William Hill’s ability to achieve strategic goals, financial condition and results of operations.

The process of risk identification and monitoring is achieved through a series of risk workshops and a corporate risk register. The Board, through the executive management team, has also determined clear policies as to what William Hill PLC considers to be acceptable levels of risk. These policies support our management is using their expertise to identify risks that could undermine performance and to devise ways of bringing them within acceptable levels. Where we identify risks that are not acceptable, we develop action plans to mitigate them with clear allocation of responsibilities.

Below are the top seven risks identified in our corporate risk register. These are assessed on the basis of impact, likelihood and control effectiveness. Click here for a full list of risks.

Risk area   What’s the issue?   What are we doing to mitigate the issue?
UK and overseas taxation and duties  

In the current economic climate, governments may seek to tax the gambling industry more to increase their revenues. In addition, many governments are introducing new taxation regimes as they change regulations to take account of online gambling. In particular, there are ongoing moves to change the UK online licensing regime to a ‘point of consumption’ model, which could result in taxation of UK online revenues.

 
  • Senior management are responsible for regulatory issues and work with an internal team and various industry bodies to build relationship with political decision-makers and to make representations to government.
  • We actively engages in relevant government consultations.
  • We are seeking to reduce our exposure to the UK, which accounted for 91% of 2012 revenues, by investing selectively in other territories.
UK and overseas regulation  

The regulatory position in online gambling is changing rapidly, particularly in Europe where several countries are implementing tax and regulatory regimes. Around 20%of Online’s revenues came from territories which do not recognised the licences it holds, which could be at risk if regulatory change leads to taking custom from a particular existing market becoming unattractive, either in terms of the tax regime or if the appropriate products are not regulated. In addition, regulation of gaming machines in the UK continues to have a high profile in the media and among politicians, with related consultations ongoing.

 
  • We continually monitor the changing legal landscape and adapt our international strategy on a country-by-country basis.
  • Senior management are responsible for regulatory issues and work with an internal team and various industry bodies to build relationships with political decision-makers and to make representations to government.
Key supplier relationships  

The business is dependent on a number of key suppliers for operations, software, systems, marketing and customer services in both Retail and Online. Contractual, operational or financial failures could cause significant damage to the business and multiple supplier failure would be a catastrophic issue for the business.

 

 
  • We have strong, active working relationships with key strategic and software partners, with identified owners of key relationship.
  • All significant contracts and services level agreements go through a robust procurement process to ensure terms and service levels provide effective protection for the business.
Business continuity and disaster recovery preparedness  

The business’ continuity of operation could be hampered or stopped by any number of incidents, from a technology failure to a terrorist attack. In particular, the business is reliant on extensive IT systems failed and back-up systems were ineffective, our ability to offer products and pricing to customers could be seriously curtailed or shut down altogether. This is exacerbated by the rapid growth of Online.

 
  • Business continuity planning and disaster recovery are regularly reviewed by executive management and the Board.
  • Plans have been or are being put in place for all key operations.
  • Back-up IT systems have been put in place for business critical systems in different geographic locations from the main system. However, this is not intended to be a full duplication of the operational systems as this would not be cost effective so some day-to-day activities could be curtailed should an incident occur. 
UK and international growth opportunities  

The UK accounted for 91% of Group revenues in 2012. While increasing our UK market share is a key growth driver in our short- and medium-term strategy, diversification of the business’ revenue sources by expanding into new territories is a key goal. Globally, a number of governments are changing or considering changing their regulation of gambling, which could present opportunities for William Hill to expand.

 
  • The Corporate Development Office manages lead identification and M&A support.
  • Online is targeting its international expansion on a small number of territories, ensuring focused investment of marketing spend in priority markets.
  • The acquisitions in Nevada and Australia are intended to give the Groupa foothold in new markets and to reduce our dependence on the UK.
The economic climate  

The economic climate remains challenging and uncertain. Whilst business performance has been relatively resilient to this so far, this may not continue to be the case as areas of discretionary spending could come under further pressure. Inflation could also increase our cost base which, in a business with a high level of fixed costs, would be difficult to mitigate.

 
  •  Business performance is carefully monitored against plans and forecasts, with frequent reviews. In this way, the business will become aware quickly should economic changes begin to impact performance. In this event, there would be cost-cutting opportunities dependent on the Board's view of the nature and timing of the slowdown.
  • We are also expendign into new international markets and aim to reduce our dependence on one territory, the UK.
Data protection and technology risk  

The risk of cyber attacks, distributed denial of service (DDoS) or unauthorised access is a key issue for the industry and the wider online world. In addition, failure to comply with regulations regarding the use of personal customer data could risk litigating or damage to our corporate reputation.

 
  • The Group's Retail, Telephone and Online divisions are compliant with the Payment Card Industry Data Security Standard and we regularly test the effectiveness of these systems.
  • Online undertakes regular external security scans and has controls in place to mitigate the effects of DDoS attaches against our systems.

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Registration Number 4212563 England