Annual Report and Accounts 2015
John Lewis Partnership plc
47
Partner Trust
Partner impact is pervasive and inherent in all of our principal risks and is given consideration in all key decisions.
ADVANTAGE OF PARTNERS
POTENTIAL
REALISE MARKET
EFFICIENTLY GROW INCREASE
PRINCIPLE 1
Possible causes
Operational risks 4 Efficiency
S
Potential consequences
How we manage and mitigate these risks
Increased risk profile o
In response to the ever changing external environment and pressures on our operating model, we have developed programmes to optimise our efficiency and productivity. There is a risk that these programmes fail and therefore the required savings are not delivered.
10 Talent
In a changing and competitive market and in consideration of our Partnership model, we constantly need to assess what talent the Partnership needs to deliver our business goals and how we can attract, develop and retain it.
Financial risks 2 Pension obligations
The open nature of the Partnership’s defined benefit scheme could lead to a future increase in pension liabilities, with the risk that cash flows are put under strain in order to address a significant pension deficit.
3 Property valuation Increased risk profile o
Continuing market shifts in the retail grocery sector, from the current channel format towards online and convenience stores, could cause a fall in freehold estate valuation for Waitrose’s freehold properties.
Compliance risks 9 Data protection breach
Due to increasing external attempts to cause disruption or access sensitive data and the pace of technological development, we may be vulnerable to a breach of our Partner or customer data.
Potential consequence:
A significant data breach and loss of either Partner or customer data could cause financial, regulatory, legal and/or reputational damage.
Partnership Aims affected: a Increase Advantage of Partners a Realise Market Potential a Grow Efficiently
a Policies and procedures clarify how to protect our Partner, customer and operational data.
a IT security controls in place, including network security and regular penetration testing provide early identification of network or system vulnerabilities and weaknesses.
a Data and IT Security Improvement Programmes are being implemented across the Partnership.
A fall in freehold estate valuations and any revaluation of our property portfolio could impact profit before tax and the strength of our balance sheet.
Partnership Aims affected a Realise Market Potential a Grow Efficiently
a All property acquisitions are reviewed by the appropriate Management Boards and annual post investment reviews are performed on new acquisitions for their first three years.
a Annual impairment reviews are performed.
a A review is in progress to assess the appropriateness of our portfolio and mix between freehold and leasehold.
Defined benefit pension obligations place a significant financial burden on the Partnership and can divert resources (and Partner attention) away from other investment opportunities.
Partnership Aims affected a Increase Advantage of Partners a Realise Market Potential
a Pensions Benefit Review approved by the Partnership Council and the Partnership Board and implementation of the new arrangements initiated.
a Valuation assumptions and pension funding strategy have regular external and internal monitoring and review.
a A project to investigate means to further de-risk the pension fund investment portfolio initiated.
Failure to attract, develop and retain talented Partners with the right capability may impair our ability to grow profitably in line with our ambitions.
Partnership Aims affected a Increase Advantage of Partners a Grow Efficiently
a Annual talent reviews ensure that our top talent is identified, developed and succession plans exist for key roles.
a Leadership Development Programmes in place to support succession and capability needs of the Partnership.
a Benchmarked benefits and remuneration to support competitive reward.
Failure to deliver the savings required from our planned efficiency programmes may constrain our ability to improve our profitability and result in strain on our Partners.
Partnership Aims affected a Increase Advantage of Partners a Grow Efficiently
a Specific projects and programmes, to focus on our current and future efficiency and productivity.
a Project management capability assigned to all major projects, and external specialists used when required.
a Change Boards in place to monitor current efficiency programmes and enable early identification of any issues.
Introduction
Partnership difference
Principles
Strategy
Performance
Governance
Financial statements
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