Annual Report 2008 Sustainable design & engineering - Grontmij

Report of the Executive Board
Transportation
This market sector is one of the cornerstones of the Group (approximately 28% of revenue). In all home markets and in Ireland,
the Group is well positioned to win tenders for main road axes, conjunctions, and rail and tunnel projects. We foresee ongoing
demand for consultancy and engineering services related to the Trans European Network structure.
In some regions, our capabilities should be expanded to benefit from the market situation. The Transportation sector is a
sector dominated by public investment and/or government initiatives. The tender procedures result in relatively higher
transaction costs, with price, rather than quality, still the ultimate deciding criterion.
Risk management
Risk management is embedded in our daily activities. Action, guidelines and procedures are defined throughout the entire
Group in order to manage one or more specific risk categories. Examples include our internal planning and control procedures,
our reporting guidelines and our organisational structure, accompanied by an appropriate delegation of powers.
In order to maintain an appropriate internal-control regime and a balanced approach to risk management in accordance with
our risk appetite and profile, risk management is an integral part of our organisation. This involves our staff taking responsibility
for identified risks as part of doing business. Our approach to risk management is based on our aim to obtain a reasonable
degree of certainty in achieving our business objectives, while complying with applicable legislation and internal and external
regulations.
Although our internal control mechanisms, our people, our available processes and guidelines, and our approach to risk
management all help to limit uncertainty or unexpected losses, which could constitute obstacles to the achievement of our
business objectives, a risk management process cannot offer an absolute guarantee that we will achieve these objectives.
Nor can risk-management processes preclude the occurrence of material reporting errors, losses, fraud, human error, insufficiently
substantiated decision-making or contraventions of the relevant legislation and regulations. There may even be other
considerable risks that we have not yet identified or risks that we assume do not have a potentially significant impact on our
results, although this may subsequently prove to be the case.
In 2009, we will further improve our pragmatic approach to risk management and will further incorporate it into our business
operations. In the coming two to three years, our focus will be on the implementation and monitoring of a risk control
framework based on the COSO framework. Further to the decision taken in 2008 to embed an internal audit function, an internal
auditor has been hired and started as of 1 January 2009.
We have identified the following categories of risks: strategic and operational risks, those associated with legislation and
regulations, and those concerning financial reporting. The overview is not exhaustive. In view of the great diversity of our
markets, clients and regions, and our broad spectrum of operations, it is virtually impossible to quantify all of the risks that may
occur and which are relevant to the entire Group. We have listed the most relevant risks in the paragraph below.
STRATEGIC AND OPERATIONAL RISKS
Main strategic risks
The most important risks that could pose a threat to a consultancy and engineering firm are:
o wage demands that cannot be passed on in the form of higher fees;
o shortage of available professionals;
o a significant change in public investment behaviours at all or any government level.
Grontmij’s day-to-day operations are less sensitive to fluctuations in prices of fuel, raw and building materials, interest rates and
fluctuations in financial markets.
While it is true that the various aspects of our core business are interrelated, they are also linked to various markets, clients and
sectors.
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