RWS Annual Report 2022 web - Flipbook - Page 46
Principal Risks and Uncertainties (continued)
Risk Category
Description
Mitigation
RWS has a leading position in new translation
technologies, such as Machine Translation (“MT”),
Neural Machine Translation (“NMT”) and Translation
Memory (“TM”), however we could be disrupted
if competitors launch or commercialise new
technologies more effectively than RWS. This could
challenge our client proposition and put client
relationships, demand for our services, revenue and
our market-leading position at risk.
There is continuous review of available technology,
possible disruptions, and the implications and benefits
of technology commercialisation for RWS. We undertake
an ongoing programme of investment in our technology
products and, through our unique combination of
technology, cultural, product and sector expertise, we are
able to differentiate our client proposition.
Currency
A significant proportion of the Group's revenues
and costs are generated in foreign currencies, which
mean these amounts, when translated into GBP, will
fluctuate depending on prevailing exchange rates.
Revenues and costs are also not always matched in
the same currency.
The Group performs currency analyses to support
hedging activities. Transactional hedges are in place to
partially manage in-year volatility. Longer-term options
may improve matching revenue to costs through flexible
supply arrangements and pricing.
Inflation and
pricing pass
through
The Group is facing a sharp increase in inflation in its
cost base and, unless these increases are successfully
passed on in whole or in part to clients, we could face
the risk of margin compression. We are also exposed
to differentials in terms of different sectors’ abilities to
absorb price increases.
The Group is actively entering discussions with clients to
ensure that the value offered is properly reflected in our
pricing and, to the extent that costs increase, that we are
appropriately compensated. This programme has been
supported through enhanced training and information
support.
Demand risks
RWS is facing increased uncertainty in predicting the
future demand for translation services in light of the
overall economic outlook, de-globalisation trends and
content volume, combined with possible changes to
the mix of service delivery.
The global business model, combined with a wide
portfolio of technology products, helps to mitigate
some specific country or industry risks. The Group also
operates an agile policy with respect to cost and cash
control and monitoring, such that, should circumstances
deteriorate, action can be taken to mitigate the impact
on earnings.
TECHNOLOGY
New technology
FINANCIAL
LEGAL AND COMPLIANCE RISKS
Legislative /
regulatory risk
The pace and demand of legislative and regulatory
changes – such as the Unitary Patent – can adversely
impact on RWS's revenues or increase potential
compliance and reputational risks (e.g. climate
change, anti-money laundering, sanctions). In
contrast, increased regulatory burdens for clients
can lead to higher demand for our services, through
increased requirements to localise content.
The Group considers new legislation requirements as
part of its risk management process and constantly
monitors for potential changes to the legislative and the
regulatory environment which could impact the business
and, where possible, develops plans to mitigate them.
RWS is facing an increased focus on climate change
transparency and reporting, as well as increasing
requirements from our clients and people to
demonstrate carbon reduction. The Group is also
exposed to the natural disasters arising from, for
instance, climate change in a small number of
locations. Failure to address this could have significant
financial and reputational impact.
The Group is monitoring regulatory developments,
complying with reporting requirements, benchmarking
its climate and sustainability performance, and
developing specific action plans for carbon reduction, as
well as the possible impact on climate change on specific
locations. For further details, see the TCFD section (see
pages 48-59).
HAZARD RISKS
Climate change
and natural
disasters
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RWS — Annual Report 2022
STRATEGIC REPORT
