Franchise Brands plc Annual Report and Accounts 2018 31 Financial Statements Strategic Report Governance Operational risks (continued) Operational risks Impact Mitigation Dependence on key personnel • Loss of key personnel, either at Executive level, or in relation to key skills, could have adverse consequences for the Group. • The inability to recruit additional skilled and experienced personnel in a competitive market for suitably qualified candidates may impact the performance of the business. • Each of the Executive Directors and a number of other key personnel are shareholders in the Company. • All employees in key positions are participants in the Company’s Long-Term Incentive Plan. • The Group encourages and supports employees to undertake training to expand existing skills where necessary. Health and Safety • Metro Rod operates in sectors where the health and safety risk is higher than the Group’s other brands due to the nature of the equipment used and the locations in which the services are carried out. Metro Rod has a good long-term health and safety record; however, a serious incident could have adverse consequences to the business. • The chemical compounds used to carry out ChipsAway repairs and Ovenclean processes are compliant with current health and safety regulations, however, should regulations change, compliance with new regulations could result in increased costs for the Group’s franchisees which may impact their viability. • Metro Rod has developed health and safety systems and processes for its franchisees and company owned operations, the objective of which is the creation of a safe environment. • A point of work risk assessment is inbuilt into our works management system and must be completed prior to work commencing. • Franchisees are provided with health and safety training and are audited for compliance through a number of inspections. Metro Rod’s processes are the subject of independent review and accreditation. All health and safety KPIs are carefully monitored and assessed on a regular basis. • The Group closely monitors industry developments that may result in a change to the regulation of products used in the ChipsAway repair and Ovenclean process. In such an event the Group will work with key suppliers with the objective of ensuring compliance and managing cost. • All brands hold ISO certification. Information Technology • The Group’s business is dependent on network and information systems, the internet and other technologies. Shutdowns or service disruptions could adversely affect the Group. • The Group is dependent on products, technologies and services provided by third parties in order for customers to use its services, as well as to deliver, measure and report advertising. • The architecture of the Metro Rod systems has recently been restructured and the systems are now hosted using the Microsoft Cloud. They are backed up regularly and there are standard processes in place to restore critical services. However, Metro Rod’s business is very reliant on these systems. • For the other Group brands, the most critical systems are also externally hosted and regularly backed up. Their operation is monitored closely by a third party professional services company. Annual penetration tests are conducted. • The IT department continually reviews the suitability of the Group’s systems and identifies any legacy or aging systems that need to be replaced. External suppliers (excluding IT) • The Group relies on certain other suppliers, without whom the Group’s revenue generation, efficiency of operations and cash flow may not be optimised. • The Group cannot guarantee that service and products delivered from third parties will remain of a high quality in the future and be provided without interruption. • The Group maintains good working relationships with its key suppliers to ensure the supply of the highest quality products and services at all times. • The Group continually assesses the quality and value of the products and services supplied and have identified alternative suppliers for all key products and services should alternatives be required at any time. • Metro Rod’s reliance on sub-contractors has reduced substantially following the establishment of a new franchisee in Scotland.