Annual report 2012

Business risks

Business risks are linked to the successful implementation of the Group's strategy, the ability to generate operating revenues in the short and long term, and to maintaining the value of assets and the Group's reputation. 

Identified business risks
Risk

Method of management  

Risk of changes to macroeconomic conditions affecting operations on key markets
  • Proactive sales approach, the development of different business models (leasing models for equipment, equipment co-financing, an integrated turnkey offer under the auspices of Telekom Slovenije, an additional range of services with business partners within the Group and with external partners, etc.).
  • Monitoring of economic trends and actively adapting the range of products and services to new conditions.
Risk of regulatory pressures on the fixed and mobile telecommunication markets
  • Active participation in market analysis before the imposition of measures, alerting authorities of possible irregularities, and monitoring of regulatory measures.
  • Monitoring of market developments and conditions on other EU markets.
  • Actively briefing the relevant EU institutions and exhausting all available legal remedies with regard to disputed regulatory decisions.
  • Ensuring compliance of internal acts with legislation in all processes.
Risk of the migration of users to other service providers
  • Active market presence, continuous development of new products, services and content, and a shift to convergent services.
  • Searching for new markets and market approaches, continuous concern for the quality of services and customers.
  • Preparation and in-depth market research, more detailed market segmentation and the adaptation of sales activities to a specific segment.
  • Proactive approach to users with regard to notification of changes in the range of products and services and prices, and benefits and competitive advantages (loyalty programme, etc.).
  • Continuous improvement of user support and customer relations processes.
Risk of diminishing profitability of users
  • Optimisation of the range of products and services in terms of content and price.
  • Regular training of sales teams.
  • Definition of competences and rules for granting discounts.
Risk of introducing new services and products
  • Following the objectives of simplicity and clarity when introducing new services and focusing on a specific segment of users.
  • Testing new products and equipment in the laboratory; on-site testing and observing the impact on the other segments; improvements in project management and in calculations of efficiency; the gradual launch of new services; monitoring the impact of new services on existing services following the launch.
  • Monitoring key market trends, motivating employees to provide innovative ideas and improvements, timely response to customers’ needs, shortening the time from idea to realisation.
  • Defining and managing business processes and associated IT support.
  • Intensive monitoring of the quality of services immediately following their introduction and prompt measures to address identified deficiencies.
Intensive monitoring of the quality of services immediately following their introduction and prompt measures to address identified deficiencies.
  • Range of verified and tested services, and high-quality support.
  • Precisely defined selection and the provision of appropriate terminal equipment.
  • Responsiveness to reported faults, feedback, immediate notification due to the unexpected termination of subscriber agreements.
Risk of limiting the provision of wholesale services owing to payment indiscipline
  • Instructions for carrying out procedures in the event of operator default.

 

Impact: 1 – low; 2 – moderate; 3 – significant; 4 – very significant
Probability: 1 – unlikely; 2 – possible; 3 – very likely; 4 – almost certain
Risk level: green – low; yellow – medium; orange – high; red – very high degree of significance
Risk level: green – low; yellow – medium; orange – high; red – very high degree of significance

Impact

Probability

Degree of risk

Risk of changes to macroeconomic conditions affecting operations on key markets 3 3 9
Risk of regulatory pressures on the fixed and mobile telecommunication markets 3 3 9
Risk of the migration of users to other operators 3 3 9
Risk of diminishing profitability of users 3 3 9
Risk of introducing new services and products 2 2 4
Risks associated with unfulfilled customer expectations 2 2 4
Risk of limiting the provision of wholesale services 3 3 9