A business must take risks to create value. Having a risk management assessment in place allows a company to take risks in a managed and controlled manner. Within Q-Park strategic, operational, financial, and reputational risks are made controllable by carefully weighing risks and returns against each other. Effective risk management is integrated into our daily operations.
Q-Park deploys a top-down risk management assessment in which strategic risk management is executed at corporate level. Responsibility for operational risk management lies primarily with local country management. Q-Park's Executive Board bears ultimate responsibility for managing the risks that the company faces.
Risk management and internal control
Ongoing identification and assessment of risks is part of our governance and periodic business review. Our Enterprise Risk Management (ERM) assessment and Compliance Programme are designed to provide management with an understanding of the key business risks the company faces. It also provides methods and processes to manage the risks that might hamper the business in delivering on our strategy.
- That the actions per step of the risk control cycle are executed based on a clearly defined plan with clear roles and responsibilities;
- That implementation of relevant legislation and internal guidelines within the organisation is assured;
- The tone at the top regarding the importance of compliance.
- The COVID-19 pandemic has had a significant impact on our business and financial results. The impact of the pandemic on our company is driven by the various restrictions that governments implemented. Restrictions aimed at minimising social contacts and slowing down the spread of the virus varied from full lockdown situations to closing retail, bars and restaurants. Furthermore, leisure activities and (mass) events have been halted for most of the year. As a result, our short-term parking revenues declined as the direct amenities in the area of our parking facilities were temporarily not available to people. As our business is largely built around the availability of these amenities, a pandemic and related measures of this order are critical to our performance and constitute a significant risk to our business.
- Related to information security, an extensive programme (2019-2021) has been developed and is being executed. The ICT infrastructure organisation and ICT processes are being transformed to higher information security standards. In 2020 user awareness has improved due to the introduction of e-learning modules for all employees within the Q-Park organisation. Furthermore, the Q-Park data centre was migrated to a new and improved environment and the roll-out of the ‘modern workplace’ with higher security standards for all devices has started. Cyber security will remain a priority in 2021 (and beyond) during which we will build on the progress made in 2020 and further focus on data security and (mobile) device management.
- Several policies regarding ethics and integrity such as the Integrity Policy and Competition Law Compliance Policy have been issued throughout the Group. Though the COVID-19 crisis has caused some delay, training to increase awareness has started.
- Internal human resource management processes have been optimised and formalised. In 2020 efficiency and consistency improvements have been realised by implementing a Q-Park Self Service portal. Our response to the COVID-19 crisis has included specific attention to employee safety and healthcare.
The Executive Board and key management periodically review the risks and related mitigation controls and procedures of the ERM assessment and Compliance Programme and reconsider the focus areas identified. Furthermore, they provide complementary insights into existing and emerging risks that are subsequently included in the policy. The ERM assessment and Compliance Programme influence the formation of controls and procedures, and the focus of business planning and performance process.
- Strategic: Taking strategic risks is an inherent part of how we do business. In pursuing growth as a strategic ambition, we are prepared to take risks in a responsible way, taking account of our stakeholders' interests.
- Operational: Depending on the type of operational risk, we take a cautious to averse approach. We give the highest priority to ensuring the safety of our employees and customers, to delivering the desired level of service, and to protecting the company's reputation.
- Financial: We pursue a conservative financial strategy, including a balanced combination of self-insurance and commercial insurance coverage.
- Compliance: We are averse to the risk of non-compliance with relevant laws or regulations, or non-compliance with our own codes, contractual agreements, and financial covenants.
- Fraudulent and unethical behaviour: We are committed to act with honesty, integrity, and respect. We are fully averse to risks relating to fraudulent behaviour and we apply a zero-tolerance policy.
The following risk overview highlights the main risks which might prevent us from achieving our strategic, operational, and financial objectives. The list is not exhaustive and there may be additional risks which do not constitute a direct threat in the short-term or which management deems immaterial or otherwise common to most companies, but which could at some time have a material adverse effect on our financial position, results, operations, or liquidity.
Q-Park risk management measures
National or local governments could implement measures which are potentially unfavourable to the parking sector (e.g. introduction of low emission zones, electric vehicle charging requirements and banning of traffic within inner-city boundaries).
Factors that potentially influence parking revenues (prices and/or mobility) include pressure from the general public and retailers, political changes, or a long-term fall in GDP. Lower parking revenues could significantly impact Q-Park’s profitability and cash flows, particularly in situations where lower parking prices will not result in more transactions.
The parking market (new business) is characterised by competition between a limited number of existing players. In addition, technology is used increasingly in the parking market and results in new competitors with a possible negative impact on Q-Park's financial results.
A car parking service is an indirect service which depends on external factors (e.g. offices, shopping centres, leisure amenities). New customer behaviour (e.g. online shopping, working from home) or changes in the popularity of certain stores, locations or areas pose a risk of a significant decrease in parking demand and, hence, a decrease in Q-Park’s business and revenue.
Risk management measures
A pandemic outbreak in combination with government measures that restrict people from going out to cities and events can significantly impact our business and financial results as we are dependent on the availability and accessibility of the amenities in the vicinity of our parking facilities.
Safety and liability
The safety of our customers and employees is our top priority. If an employee or a customer sustains injury while at work or while visiting one of the Q-Park parking facilities, this could also impact our reputation.
Continuity of the company and its business is crucial. Continuity depends on a number of factors, including suppliers. We are particularly vulnerable regarding Parking Management Systems (PMS), ICT, and infrastructure which are to a large extent provided by third party suppliers.
Staffing and retention
Good, experienced, and knowledgeable people are the foundation of our company and its success. The company must ensure that it is able to employ and retain the right people.
Ethics and integrity
Ethics and integrity are important conditions for confidence in the company. Behaviour deemed to be unethical could lead to loss of revenue and reputation.
Risk management measures
Valuation of fixed assets and goodwill
The company owns a considerable amount of property and goodwill. If the economic climate deteriorates this could result in a permanent reduction in the value of assets. If potential impairment indicators are not identified, determined, or communicated in a timely fashion, the company could incur reputational and financial damage.
Given that the nature of the business is capital-intensive, access to external financing is crucial for continuity. A liquidity risk could arise if external financing is not available to the company when refinancing is required.
Interest rate risks
The external debts can be subject to variable interest rates, thereby exposing the company to fluctuations in interest rates. A significant increase in variable interest rates would have a negative impact on results.
The company's functional currency is the euro. Given that the company also operates in the United Kingdom and Denmark, we are exposed to fluctuations in the GBP and DKK exchange rates.
Compliance and reportingDownload XLS
Risk management measures
and fair view
If misstatements are made such that the financial statements do not give a true and fair view of the company's financial position, financial performance, and cash flows, users of the financial statements would be incorrectly informed.
ICT and information security
Given the increasing use of online communication and the professionalism of cyber criminals, the company must focus constantly on continuity of ICT systems and on ensuring the security of crucial information and sensitive customer data (e.g. payment card details, passwords). A successful attack or hack by cyber criminals could cause reputational and financial damage and impact business continuity.
Changes in the legal and regulatory environment tend to increase the risk of non-compliance with local, national, and international laws and regulations, as well as tax legislation. Failure to comply with applicable regulations could lead to fines, claims, and reputational damage.