Strategic risks may have an impact on the achievability of Ordina’s strategic objectives. We explain the main strategic risks below.
Sensitivity to economic cycles
Economic fluctuations, due to factors such as an unstable (geo) political situation, in combination with a relatively inflexible cost structure, will have a direct impact on our results.
Ordina’s relative scale
Some (potential) clients occasionally have concerns or doubts regarding Ordina’s scale in relation to the scale of the client or the contract. On the other hand, Ordina could quickly become dependent on a specific client when revenues from that client increase.
Consequences of threats or acts of terrorism
It is possible that (the threat of) acts of terror may result in restrictions on travel, that particular locations may be inaccessible for longer periods of time, or that the operations of clients are brought to a standstill temporarily. This has direct implications for our services.
Rise of small, specialist companies
We are seeing a steady increase in the number of small, specialist companies coming on the market, as competitors in terms of both our services and on the labour market. The reason for this is the decline in
demand for all-encompassing projects, and client demand for specific sub-solutions. In addition, these companies are doing a lot to be attractive employers for their staff.
Financial risks are risks related to financing, the financial results, the financial stability of partners in the chain and fiscal risks. The main financial risks are as follows.
The increasingly critical stance adopted by financiers is limiting financing opportunities in the market.
Pressure on consultancy rates
The rates for the professional services of commodity service providers could come under further pressure due to freelancers and brokers.
Due to market circumstances, clients, suppliers or vulnerable groups could experience solvency or continuity issues.
Impairment of goodwill
Market circumstances and forecasts may sometimes necessitate the impairment of goodwill on acquisitions.
Valuation projects in progress
Projects can be complex due to the scale, the desired functionality, the applied technology or the involvement of several parties. This can result in financial risks in the valuation of projects in progress with respect to projects for which Ordina bears financial responsibility.
Our operations in Belgium/Luxembourg are further removed from our head office in geographical terms and operate in their respective markets with their own employees, clients and management. This entails a risk that these offices might operate too autonomously.
Valuation deferred tax
At year-end 2017, Ordina had loss carry-forwards totalling EUR 42.7 million. In the context of these loss carry-forwards, Ordina has recognised a deferred tax claim of EUR 10.2 million. There is a risk that it will not be possible to offset these loss carry-forwards quickly enough, as a result of which (a part of) the deferred tax claim will have to be depreciated.
Operational risks are unexpected developments that may have a negative impact on internal processes, employees, clients and systems. The main operational risks are as follows.
Increasing risk profle client projects
There is a growing need among clients to transfer responsibility to their suppliers. This combined with a growing claim culture has raised the risk profile of our projects.
Scarcity on the employment market
There is a shortage of highly-trained IT professionals. This is due in part to a limited supply on the labour market and in part to lower retention rates (the retention of expert and experienced employees) and due to factors such as the recovering economy.
Data security and legislation
Data security is vital in the current digital era. Confidential information can fall into the wrong hands due to cybercrime or the failure of IT systems.
Compliance risks include any and all issues that could lead to reputation damage, legal damage, sanctions imposed by regulatory bodies and financial damage as a result of the failure to comply with prevailing laws and regulations. The main compliance risks are as follows.
Failure to comply with laws and regulations
Ordina’s business operations must comply with all laws and regulations, such as the tender laws, competition laws, the duty to report data breaches and the Data Protection Act. In addition, Ordina must comply with all laws and regulations related to reporting and its stock exchange listing.
Risk of reputation damage
Ordina’s reputation might be damaged by unfavourable reports about Ordina in the Dutch press and other channels.