48
John Lewis Partnership plc Annual Report and Accounts 2014
KEY PARTNERSHIP RISKS AND MITIGATIONS
process, resulting in improved understanding and reporting across the Partnership.
9 7
4
8 6
5
1
3 2
Low Minor Moderate Likelihood
1 Managing the delivery of change
Risk description Failure to deliver the benefits of major change programmes, such as the Personnel Transformation Programme and the upgrade of the distribution infrastructure in John Lewis, and the associated Partner benefits, resulting in increased costs, disruption in trading activities and loss of Partners’ trust.
2 Operating model strain
Risk description Several pressures, such as a shift in sales mix towards lower margin products, growth in online and a lack of flexibility in operations create strain in our operating model, threatening our ability to grow profitably.
3 IT operating model
Risk description The IT operating model is unable to deliver change programmes and business plan ambitions, placing the Partnership at a competitive disadvantage.
4 Pension obligations
Risk description Defined benefit pension obligations place a significant or unsustainable financial burden on the Partnership.
5 Business interruption
Risk description Reputational damage and financial loss as a result of business interruption and/or the loss of key IT systems.
Key mitigations – Key systems are tested regularly and disaster recovery plans are in place for platinum (business-critical) systems. However, these sit alongside a number of other planned improvements designed to strengthen system resilience:
– A peak capacity and risk remediation review is underway, which will outline required resilience and capacity requirements to be implemented for 2014/15.
– A revised data centre strategy to run more of our key live systems on our backup data centre, which will ensure greater resilience, will be rolled out later this year.
– A review and refresh of our management incident response process is also underway.
Key mitigations The valuation assumptions and pensions funding status are subject to regular external and internal review and ongoing monitoring. A pensions benefit review is also underway to assess how best to offer future pension provision to Partners in an affordable but fair manner.
Key mitigations There is ongoing work to strengthen the capability of the IT functions including a customer driven priorities project to deliver the IT infrastructure and processes that will provide resilience and protect the Partnership.
Key mitigations Significant investment is planned in our IT infrastructure and supply chain to support their efficiency and continue to develop a market-leading omni-channel proposition.
Key mitigations – During the year, we have strengthened the pan-Partnership programme governance with Group and Divisional Change Boards, allowing for the early identification and remediation of delivery issues and consideration of the impact on Partners.
– A framework for project and programme assurance has also been developed and is being rolled out, led by Internal Audit.
– At divisional level, Project Management Offices are being strengthened to develop change capability and process improvement.
Significant High
Low Minor Moderate Impact
Significant High
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