Annual Report 2010 in PDF - BBA Aviation

Principal Risks and Risk Potential Impact Mitigation
Uncertainties General economic downturn – Reduction in revenues and profts as a – Strong fnancial controls to monitor
result of reduced B&GA and commercial fnancial performance and provide a
fying and military expenditure basis for corrective action when required
– Low fxed costs allow cost base to be
fexed to meet demand
– Mixture of early and later cycle businesses
Catastrophic global event – Reduction in revenues and profts as – Strong fnancial controls to monitor
(terrorism, weather) with a a result of reduced B&GA and fnancial performance and provide a
material impact on global commercial fying basis for corrective action when required
air travel – Low fxed costs allow cost base to be
fexed to meet demand
Legislative changes causing – Reduction in revenues and profts as a – Active participation in all relevant
material increase to cost of result of reduction in B&GA fying hours industry bodies
B&GA fight relative to – Low fxed costs allow cost base
alternatives to be fexed to meet demand
Ability to attract and retain – Loss of key personnel – Remuneration structure designed to
high-quality and capable – Lack of internal successors to key reward superior performance and
people management roles promote retention
– Short to medium term disruption – Succession planning process embedded
to the business with review at Executive Management
Committee and Board level annually
– Proactive employee development
Potential liabilities from – Reputational impact with associated – Standard operating procedures with
defects in services and deterioration in customer relationships routine route cause analysis of
products – Loss of earnings from liability claims all incidents
– Liability insurance
Intentional or inadvertent – Reputational impact – Clear corporate policies and education
non-compliance with – Exposure to potential litigation in all major risk areas
legislation or criminal proceedings – Semi-annual compliance certifcation
by all senior management
– Robust internal control environment and
regular review by internal and external audit
Foreign exchange rate – Volatility in sterling earnings, balance – Dollar borrowings provide partial hedge
f u c t u a t i o n s sheet position and fnancial covenants of operating proft volatility through the
interest line
– Bank covenants contain ability to test
at average rates
– Revenue and cash fow streams
predominantly in US dollars, matching
the US dollar assets and liabilities
Environmental exposures – Loss of earnings from cost to remediate – Strong procedural controls and physical
or potential litigation containment when working with fuel or
– Potential for loss of licence to operate other hazardous chemicals
– Greater than expected liabilities – Active management of known
associated with historical operations environmental matters to minimise
costs to resolve
Directors’ Report — 17