Annual Report 2010 - Falck

42 Falck Annual Report 2010 | Management review
Risk factors
The Board of Directors and the Executive Management Board
of Falck regularly monitors and assesses the Group’s overall
risk exposure relative to probability and implications as well
as established risk measures. A policy has been established for
material risks under which key persons have been designated
with a view to ensuring necessary controls and monitoring of
risks. The Board of Directors and the Executive Management
Board monitors developments in risks relative to an established
risk strategy.
This description of risk factors includes examples of the risks
which Management estimates may have an impact on the
Group’s future growth, activities, financial position and results
of operations.
The following sections do not contain an exhaustive description
of all risks associated with the activities of the Group. The risk
factors are divided into business risks and financial risks and are
described in random order.
The Board of Directors
and Executive
Management
Board monitors
developments in
risks relative to an
established risk
strategy
Business risks
Political risks
Some of Falck’s activities are based on contracts with public
authorities. Falck’s opportunity of renewing existing contracts
and winning additional contracts is dependent on the political
decision-making process with regard to outsourcing of
public-sector operating activities. If Falck does not have the
opportunity to renew or successfully tender for these contracts,
or if contracts are terminated, it may therefore have a material
adverse impact on Falck’s business.
Image
Falck has a strong image built up over a long period of time
which to some extent is the product of Falck operating in a
number of areas that are subject to a high level of public interest.
This strong image is of material importance to the Group’s
ability to retain and develop Falck’s activities. There is consequently
very high focus on ensuring that Falck operates morally
and ethically correctly and with a high quality of the services
provided.
Cost structure
Falck’s activities are labour-intensive and consequently affected
by the cost of labour, pensions, regulations on working hours,
social security contributions and other employee benefits
provided to Falck’s employees. Falck may be affected by nonacceptance
by the market of price increases, including increases
in payroll costs. However, historically, it has been possible to
include a large proportion of increases in payroll costs in Falck’s
pricing.
Especially in the Assistance business and to some extent in
the Healthcare business, the costs are also dependent on the
extent to which customers use the resources provided for in the
subscription contracts. For instance, increased use of assistance
by subscribers of roadside assistance will entail increased costs
related to such responses.
Attracting and retaining employees
Falck relies on being able to attract and retain employees with
special competencies and experience in order to achieve its
business goals. The special competencies are to a great extent
built up during the employment relationship. The Group has
historically had a low staff turnover rate, but continually implements
initiatives both locally and in the Group as a whole aimed