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GRI Content: G4-2, G4-14, G4-SO2

Our annual report and sustainability report provide detail on the business and sustainability risks and opportunities for SGS. A summary of these is detailed in the table below:

Risk Management Overview

Risk Area Risk Description Measures in Place
Strategy and Planning
Investment Investment is required for SGS to remain responsive to market and technological advances.
  • Solid individual business strategies and development plans
External Factors / Competition The SGS Group operates in volatile markets and needs to sustain and/or develop market share with innovation and technical developments.
  • Market intelligence (TIC industry trends)
  • Innovation team
  • Organic growth initiatives by individual business
Business Performance The SGS Group operates in volatile markets and needs to sustain and/or develop market share with innovation and technical developments.
  • Continuous evaluation of assets and businesses
Mergers and Acquisitions Inorganic growth has a significant impact on achieving the Group's strategic objectives. Inefficient integration of new companies may lead to suboptimal synergies
  • Specific policy on mergers and acquisitions (key organizational criteria and financial metrics)
  • Operations Council review/approval of projects against admissibility criteria
  • Integration guidelines and platform to monitor integration status
Pricing Pricing strategies to ensure that the SGS Group remains competitive in market sectors and geographies.
  • Benchmarking of services and pricing tariffs
  • Customer engagement and formal reviews
Political Activities Political instability is a risk in some of the countries where SGS Group operates.
  • Collaboration with experts to maintain local legal, political and fiscal knowledge
  • Diversification of activities and countries to limit geopolitical risk
Governance And Integrity
Corporate Governance The quality of governance affects the management of risk and the value of a corporation. Effective, strong corporate governance is essential for the efficient functioning of markets.
  • The SGS Board of Directors has overall responsibility for key business policies, operational management and strategic oversight of the Group's business activities. It is also responsible for ensuring regulatory compliance, effective internal controls and standards of professional conduct
  • The SGS Board is assisted by the Audit Committee, Professional Conduct Committee and Operations Council to ensure appropriate quality of governance
Business Ethics SGS operates in countries that are recognized as having higher bribery and corruption risks. Non-compliance with related laws, such as anti-bribery or fair competition legislation, could lead to litigation or loss of accreditations.
  • The SGS Code of Integrity and Supplier Code of Conduct
  • Integrity rules (from integrity of services to compliance with legislation)
  • Training for all employees
  • Whistle-blowing process
  • SGS Human Rights Policy (as of April 2017)
Reputation SGS relies on its reputation for integrity and independence. In the event of poor service delivery or a health and safety-related incident, crisis management may not be sufficient to mitigate any resulting brand and reputational damage.
  • Business operating procedures
  • Health and safety standards
  • SGS Code of Integrity and whistle-blowing process
  • Risk (annual risk assessment) and control framework
  • Business Continuity Plan
Regulatory Compliance The SGS Group is subject to a wide variety of laws, regulations and government policies. SGS is exposed to litigation, which could lead to payment of damages and affect the reputation of the Group.
  • Claim reporting system
  • Insurance coverage and policies
  • Continued government scrutiny
Global Support
IT Integrity and Data Security Information systems and technology infrastructure are key to supporting SGS's strategy and growth. The IT architecture and the new technologies chosen could expose SGS Group to new threats.
  • Information Technology Service Delivery Model
  • Security systems and applications
  • Identification and prioritization of strategic projects through the IT Committee
  • IT security strategy
  • Security operations center development
  • Customer privacy and data protection controls
Finance The SGS Group could suffer from failing to present reliable financial statements. SGS Group is also exposed to risks of fraud or financial misstatements.
  • Review of annual and half-year results by independent external auditors
  • Financial and management controls
  • The Internal Control organization at SGS expanded in 2016, strengthening the control framework
  • Various policies are being revisited and updated, such as the Group Tax Policy and the Group Treasury Policy
Security of Company Assets SGS businesses and assets (covering our people, physical assets, equipment, intellectual property and funds) can be exposed to a range of security risks.
  • SGS Corporate Security team
  • SGS Global Security Standard and Security Guidelines
  • Security Intelligence Hub collates internal and external data on threats and controls in place
Respect for Human Rights Business should be conducted in a manner that respects the rights and dignity of everyone affected by our business activities.
  • SGS Business Principles, Code of Integrity and SGS Human Rights Policy (as of April 2017)
  • SGS Supplier Code of Conduct and Supplier Self-Assessment Questionnaire
  • SGS Human Rights Committee
  • SGS Professional Conduct Committee
  • Whistle-blowing process
Sustainable Procurement As a major purchaser, SGS must ensure a sustainable supply of goods and services.
  • Rationalization of supply base and efficiency savings
  • SGS Supplier Code of Conduct
  • SGS Supplier Self-Assessment Questionnaire
Talent Acquisition and Retention The SGS Group relies on key personnel, from operations to executive level. SGS needs to retain employees with relevant experience. Skilled employees may leave to join competitors. Loss of key personnel may impact quality, reputation and customer confidence.
  • Succession planning to ensure effective continuation of leadership and expertise
  • Geographic mobility to ensure continuity
  • Employer branding initiative to attract talent
  • New HR strategy focusing on talent management and recruitment
  • Employee engagement via CATALYST survey and employee representation and collective bargaining systems
Diversity and equal Opportunities All workers must be treated equally and be given the same set of opportunities regardless of their race, age, gender, sexuality, disability, culture or anything else that might be discriminated against.
  • The SGS Business Principles, Code of Integrity, Employment Policy and the SGS Human Rights Policy (as of April 2017) underline our commitment to diversity and equal opportunities
  • Employees and managers are trained in the principles of non-discrimination as part of our mandatory annual integrity training
Innovation Capability Failure to innovate new services and ways of delivering them could prevent SGS from maximizing revenue.
  • Monitoring of operational KPIs to allow rapid up/down- scaling of variable costs
  • Diversified service offering to a wide range of industries and geographies
  • Increasing digitalization of services
Customer Relationship Management A lack of focus on customer needs may lead to customer dissatisfaction and customer loss.
  • Key account management structure and dedicated sales people
  • Tracking on-time delivery
  • Customer satisfaction surveys
Energy and Climate Change Mismanaged energy consumption and greenhouse gas emissions could lead to increased costs, interrupted supply, safety risks, business disruption and regulatory fines.
  • Sustainability management system and external verification of sustainability data
  • Carbon neutral strategy, Energy Efficiency in Building program and commitment to RE100 to purchase 100% renewable energy
  • Employee awareness campaigns
  • Fleet Vehicle Emissions Policy

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