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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.

Risk Management Overview

A summary is detailed in the table below:

TOPIC DESCRIPTION MANAGEMENT APPROACH
Strategy and Planning
Investment Strategy / Merger & Acquisitions Investment in the appropriate areas is required for SGS to remain responsive to advances in technology and the market.
Inorganic growth has a significant impact on achieving the Group’s strategic objectives. Inefficient integration of new companies may lead to suboptimal synergies.
  • Solid individual business strategies and development plans
  • 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
Economic Conditions, Market Presence
The Group operates in volatile markets and needs to sustain and/or develop market share with innovation and technical developments to avoid the risk of being disrupted.
  • Market intelligence
  • Innovation team
  • Sales strategy and sales organization
  • Organic growth initiatives by individual business
Pricing SGS needs to ensure that pricing strategies remain competitive in market sectors and geographies. Failure to do so could see its market share diminish.
  • Benchmarking of services and pricing tariffs
  • Customer engagement and formal reviews
Tax Strategy
We provide IVTC services across the globe and manage the taxation risks resulting from activities based on governance and reputation and aligned with our broader business risk management and compliance framework.
  • SGS’s processes, policies and governance procedures operate to ensure we are compliant with all relevant taxation laws and regulations in the territories in which we operate and are designed to identify and mitigate tax risks, where possible
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 SGS to manage its overall risk.
  • 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
Ethical Culture 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 Code of Conduct for Suppliers
  • Integrity rules (from integrity of services to compliance with legislation)
  • Training for all employees
  • Whistle-blowing process
  • SGS Human Rights Policy (as of 2017)
Brand, Brand Protection and Risk and Crisis Management 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
Compliance with Local Laws and Regulations 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 Security/ IT Operations and Data Privacy & Protection 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
  • Security operations center development
  • Penetration testing and vulnerability management processes
  • State-of-the-art security software
  • Mandatory employee trainings on cyber security and risks
  • Business Continuity Plan
  • SGS Enable program to move all physical servers to the Cloud
Financial and Economic Performance SGS relies on achieving strategic objectives linked to growth and margin. A failure to hit those targets could have a negative impact. The Group could also suffer from failing to present reliable financial statements and from exposure to risks relating to fraud and inaccurate financial statements.
  • Continuous evaluation of assets and businesses
  • Review of annual and half-year results by independent external auditors
  • Financial and management controls
  • Strengthening of the control framework through the expansion of SGS Internal Control
  • Revisiting and updating various policies, such as the Group Tax Policy and the Group Treasury Policy
Approach on 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 Failure to conduct business in a manner that respects the rights and dignity of everyone affected by our business activities could have legal and financial repercussions and potentially result in long-term reputational damage.
  • SGS Business Principles, Code of Integrity and SGS Human Rights Policy
  • SGS Code of Conduct for Suppliers and Supplier Self-Assessment Questionnaire
  • SGS Human Rights Committee
  • SGS Professional Conduct Committee
  • Whistle-blowing process
Sustainable Procurement and Supply Chain As a major purchaser, SGS must ensure a sustainable supply of goods and services and ensure respect to human rights across its supply chain to mitigate reputational and non-compliance risks.
  • Rationalization of supply base and efficiency savings
  • SGS Code of Conduct for Suppliers
  • 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 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
Operational Integrity
Businesses that do not prioritize employee health and safety, along with environmental protection put themselves at risk of reputational damage, elimination as a supplier or potential supplier and high employee turnover.
  • OI Management System aligned to internationally recognized standards
  • Safety month and Rules for Life
  • Industrial Hygiene Program
  • Specific Risk Assessment Process for Operational Integrity risks
  • Safety Culture Index
  • Regular and specific face-to-face and online safety trainings
Talent Development & Recognition and Employee Engagement
Without a well-structured workforce with the right skills, motivation and ambition to succeed, the strength of a business can be compromised and with that, the ability to achieve goals set decreases.
  • Established onboarding covering values, culture and business processes
  • Employee survey investigates how engaged and enabled employees feel
  • Local affiliates provide targeted well-being initiatives
Fair and Equal Remuneration
A failure to provide all employees with fair and equal remuneration may be regarded as discriminatory and could undermine efforts to attract, motivate and retain talent at SGS.
  • Remuneration framework based on performance, competencies and experience
  • Variable long-term and short-term profit-sharing compensation plans
  • Group-wide job architecture
Investment in Local Communities
Businesses that do not strive to reduce their impact and fail to respect the rights and dignity of individuals and communities affected by their business activities may face legal, business and reputational repercussions.
  • SGS Community Policy and Guidelines
  • SGS sponsorship and investment in community programs
  • Annual community survey monitoring performance in local community projects around the world
Operations
Innovation 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
  • Employee-led INNO program encouraging employees to drive internal innovation
CRM/Customer Satisfaction
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
  • CRM System – Sales Pipeline
  • SGS Enable – IT transformation program
Architecture and Technologies
New IT technologies can introduce additional security risks.
  • Strong global coordination of all IT resources
  • Support from robust IT business partnering
  • Increased governance through roll out of IT strategy
  • Launch of dedicated IT Security Operations Center
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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