Strategic risk management

Risk-based leadership with the Board at its apex is fundamental to Datatec’s approach to its operations. In line with the King IV Code, the Board governs risk in a way that supports the organisation in setting and achieving its strategic objectives.

Our risk management process

The Group’s risk management process has three key steps:

Risk oversight

Our key risks

1	Technological market disruption	4	Risk of failure to fund working capital needs sufficiently
2	Dependence on key vendors	5	Risk of overdependence on key personnel
3	Internal technological risks – cyber security

As an ICT group with operations and activities across both established and emerging markets, we face challenging risks as well as numerous opportunities. The strategic objectives affected by each key risk are illustrated using our strategic objectives icons.

Datatec Group

		Key risk		Our strategic response
		Technological market disruption
		The Group’s operations focus on the higher value, faster growing products and services in the ICT supply chain. It is essential to anticipate the impact of the rapid technological change which is a feature of the sector.		Careful partner selection in terms of vendors Work closely with our vendor partners Employ qualified staff at operating divisions who can pre-empt market changes resulting from new technology Provide products and services ahead of competitors
		Dependence on key vendors
		The Group is dependent on certain vendors, particularly Cisco, whose products and services accounted for a significant proportion of the Group’s revenue. If any one of the Group’s principal vendors terminates, fails to renew or adversely changes its agreement or arrangements with the Group materially, it could significantly reduce the Group’s revenue and operating profit and thereby seriously harm the Group’s business, financial condition and results of operations.		Maintain strong and transparent relationships Diversify vendor portfolio to reduce reliance on any one specific vendor
		Internal technological risks – cyber security
		The Group’s internal systems are at risk, both from planned changes leading to business interruption and disruption by external “cyber” threats. The Group continues to face the threat of financial crime attempted by hacking, business e-mail compromise and “social engineering”. The Group has high dependence on its key information systems.		Deploy significant resources on its own information security defences Utilise enhanced data privacy policies and procedures Utilise technological means such as anti‑virus and anti-phishing software as well as the expertise of IT experts Continuously enhance threat prevention and detection policies, tools, procedures, and internal controls Actively monitor and address threats Education/awareness campaigns among employees
		Risk of failure to fund working capital needs sufficiently
		The Group’s business is working capital intensive; this is particularly relevant for Westcon International. Westcon International’s financing facilities are utilised to finance accounts receivable and inventories. The availability of these facilities and any material changes thereto may affect the business’s ability to fund its working capital requirements.		Manage working capital through inventory control and effective accounts receivable management Regularly monitor funding availability, sales and collection forecasts Engage in regular communication with providers of funding Working capital is a key focus area of management Working capital is a key focus area of the review processes in the risk management framework Ensure sufficient liquidity available
		Risk of overdependence on key personnel
		The Group’s future success depends largely on the continued employment of its executive directors, senior management and key sales, technical and marketing personnel. Certain key employees have relationships with principal vendors and customers which are particularly important to the business of the Group. The executive directors, senior management team and key technical personnel would be difficult to replace and the loss of any of these key employees could harm the business and prospects of the Group.		Maintain a high standard of employment conditions and working environment Provide benefits and share incentive schemes Ensure proper succession planning in place

Strategic objectives key
	Improving shareholder returns		Business development		Enhancing competitiveness and profitability		Responsible business

Westcon International

	Risk		Response
	Impact of global semiconductor shortages		Risk is reducing. Continue to implement advanced ordering and increase safety stock of critical stock-keeping units. Additional focus on non-device-based solutions.
	Global supply chain disruption (through emerging geopolitical and climate related impacts)		Constantly monitor supply routes and options. Additional focus on non-device-based solutions.
	Liquidity and financing – availability of working capital funding		Regularly monitor funding availability, sales and collection forecasts; and engage in regular communication with providers of funding. Primary European facility term secured through September 2026.
	Inventory management – fast moving high obsolete inventory resulting in excessive write-offs		Ensure stringent inventory management controls and monthly inventory reviews; and include stock rotation rights in vendor contracts.
	Foreign exchange – impact of fluctuations on results and management of exposures		Ensure that Westcon International is appropriately hedged.
	Macroeconomic environment		Conduct thorough market analyses and monitor macroeconomic factors in all key markets.
	Failure to manage payment discounts, product rebates and allowances		Oversight over prompt payment discounts, product rebates, allowances and vendor-based programmes. Monitor growth and actively manage growth in strategic areas. Maintain strong and transparent relationships with vendor partners.
	Dependence on key vendors		Maintain strong and transparent relationships.
	Cyber security threats		Threat prevention and detection policies, tools and procedures are continuously being enhanced. Threats are actively monitored and addressed. Disaster recovery and business continuity plans are formally documented, reviewed and tested. Phishing campaigns and mandatory security awareness training are conducted regularly throughout Westcon International.

 

Logicalis International

	Risk		Response
	Dependence on key vendors		Logicalis International will continue its programme of diversification of vendor portfolio to reduce reliance on any one specific vendor and maintain strong and transparent relationships with them.
	Liquidity management		Focus on optimising Logicalis International for the current environment which will include cost and liquidity management. Logicalis International will continue to assess its ongoing funding requirements as trading conditions change in future and growth opportunities arise, but it is envisaged that the credit capacity currently used across Logicalis International remains adequate for the short to medium term.
	Macroeconomic environment		Conduct thorough market analyses and monitor the macroeconomic factors in volatile markets.
	Cyber security threats		Threat prevention and detection policies, tools, procedures, and internal controls are continuously being enhanced and audited. Threats are actively monitored and addressed. Disaster recovery, business continuity plans, and incident response are formally documented, reviewed and tested. Phishing awareness campaigns and mandatory security awareness training are conducted regularly.
	Retention and acquisition of talent		Logicalis International continues to review its tools (career bands and performance management, engagement scores, employee value proposition) to ensure it remains attractive in the market.

 

Logicalis Latin America

	Risk		Response
	Dependence on key vendors		Logicalis Latin America will continue its programme of diversification of vendor portfolio to reduce reliance on any one specific vendor and maintain strong and transparent relationships with all of them.
	Liquidity management		Focus on optimising Logicalis Latin America for the current environment, including cost and liquidity management. Logicalis Latin America will continue to assess its ongoing funding requirements as trading conditions change in the future and growth opportunities arise. However, it is envisaged that the credit capacity currently used across Logicalis Latin America remains adequate for the short to medium term.
	Business concentration with selected customers		Logicalis Latin America will continue its programme of customer base and business volume expansion to reduce reliance on specific customers.
	Macroeconomic environment		Conduct thorough market analyses and monitor the macroeconomic factors in volatile markets, including the impact of inflation and hyperinflation.
	Cyber security threats		Threat prevention and detection policies, tools, procedures, and internal controls are continuously being enhanced. Threats are actively monitored and addressed. Disaster recovery, business continuity plans, and incident response are formally documented, reviewed and tested. Phishing campaigns and mandatory security awareness training are conducted regularly.
	Retention and acquisition of talent		Logicalis Latin America continues to monitor its HR departments and tools (career bands, performance management, and survey platforms) to ensure it remains attractive in the market.