Risk Management

   

The Group supplies a wide range of services in many markets and countries. This gives rise to a range of risks that need to be identified, assessed and managed. The Group's system of planning, budgeting and performance review assists with this process. The management of risk is not separated from the business, but is treated as an integral part of our culture and the way we operate. Each of our businesses is expected to identify and take appropriate steps to mitigate risks associated with its operations. An element of this risk management is the maintenance of an appropriate portfolio of insurance policies with suitable limits of indemnity. These include policies in respect of physical assets as well as liabilities to third parties and employees. Professional indemnity insurance is also maintained in appropriate parts of the Group to safeguard against losses arising from litigation associated with any shortfall in performance. The Executive Committee oversees the management of risk to which the Group is exposed and reports those of a material nature to the Board together with recommendations for their mitigation. The principal risks to which the Group is currently exposed are outlined below.

 

Health and Safety

The Group’s activities require the monitoring and management of the health and safety of its employees as well as sub-contractors, client personnel and the general public. A failure to manage this risk correctly could expose our employees and these other groups to dangers as well as exposing the Group to potential liabilities and reputational damage.

Detailed health and safety policies and procedures are in place throughout the Group which are designed to identify and mitigate risk. These are subject to regular review to ensure that any emerging risks are identified and managed. Policies and procedures incorporate a structured reporting process which aims to ensure that when incidents do occur they are properly investigated and appropriate corrective action taken. The Group’s approach to the management of health and safety is described in more detail on pages 15 and 16.

The health and safety of employees and others it may affect is of paramount importance to the Group and it remains committed to good practice that as a minimum complies with the requirements of law. The Board sets the overall framework and standards for the management of health and safety, the implementation of which is overseen by the Company Secretary. Within this context each of the Group’s businesses is responsible for the development of appropriate safe working conditions and systems to protect employees, contractors, visitors and others who may be affected by the Group’s activities. Where appropriate, work activities are assessed for health and safety risks and appropriate mitigation measures and controls put in place. Employees are trained to ensure that they have the appropriate skills to carry out their job safely and senior management are trained to ensure that obligations to employees for whom they are responsible are properly discharged. The Group’s businesses have appropriately qualified health and safety advisors to develop and implement these systems. Health and safety systems are also subject to regular review and audit.

Health and safety issues and performance are reported to and reviewed by all operating Boards at each meeting. This incorporates a system for reporting all near misses, accidents, dangerous occurrences and work-related diseases. All such incidents are investigated to determine the root cause and wherever possible action is taken to mitigate the risk of recurrence. The Group Board receives and reviews a report at every meeting which summarises health and safety erformance across the Group as well as detailing any significant incidents and emerging issues.

OHSAS 18001 is an internationally recognised standard for health and safety management that is aligned with the ISO 9000 (Quality Management) and ISO 14000 (Environmental Management) standards. 40% (2014: 30%) of employees across the Group work in offices that now have third party accreditation to the OHSAS 18001 standard.

During the year neither the Group nor any Group company was prosecuted for the breach of health safety regulations. The reportable accident rate in the year was 2.2 accidents per 1,000 employees (2014: 2.0). Accidents that do occur most commonly relate to field staff and involve manual handling activities, slips and falls.

Reportable Accident Rates
Group 2015 2014
Reportable injuries 12 11
Reportable injuries incident rate per 1,000 employees 2.2 2.0

Political Events

The change and uncertainty arising from political events may have an impact upon the markets in which we operate and our ability to deliver our services to clients.

As previously highlighted our operations in Kurdistan and Iraq have been affected by conflict in the Middle Eastern region, whilst sanctions imposed on the Russian Federation have had an impact on our business in that part of the world. Uncertainties associated with the outcome of the UK general election have, however, been resolved helpfully since the last time of reporting.

The significant majority of the Group’s services are provided in relatively stable and predictable liberal democracies. This coupled with the range of markets and geographies that we serve operates to limit the impact of adverse political developments in particular countries. In so far as changes can be foreseen, measures can be taken to match costs to anticipated workload.

Environmental and Health Risks

Adverse occurrences of this type may affect our ability to deliver our services and our clients’ demand for them. Our operations have previously been affected by environmental events such as Macondo oil spill in the Gulf of Mexico. No events of this type have materially affected us in 2015 and the risks associated with the Ebola virus that were identified at last time of reporting have since receded.

Whilst it is impossible to predict events of this type, the wide range of geographies and markets that we serve should limit the impact of adverse occurrences in any specific country or region.

Information Systems

A lengthy failure or discontinuity in our IT systems could have a significant impact upon our operations.

The Group’s IT systems are centrally managed with certain specific functions carried out locally. An annual Group plan is produced which includes measures designed to ensure reliability and resilience of the Group’s systems as well as appropriate disaster planning. The Group has operations in a large number of locations, which would enhance its ability to withstand any individual failure or malfunction. The Group has never experienced a significant failure of its systems.

A cyber-attack upon our systems could result in loss of data, disruption to operations or direct financial loss. The Group has suffered a number of attacks of this nature but has never experienced any significant loss due to the effective operation of the systems and controls in place. These systems as well as guidance given to employees remain under regular review.

Recruitment and Retention of Key Personnel

The Group's services are performed by well-qualified and professional employees with expertise across a wide range of areas. A failure to recruit and retain employees of appropriate calibre will, accordingly, impact our ability to meet our clients' requirements and correspondingly to maintain and develop our business. As previously reported, staff retention and recruitment issues had significant impact on our operations in North America during the year. As a result of this we have reviewed and tightened our restrictive covenants.

As described on pages 13 and 14 the Group maintains competitive remuneration and incentive structures which are reviewed on a regular basis. It also maintains an environment that is supportive of professional development through training and career opportunity.

Market Position and Reputation

The Group’s reputation for project delivery relies upon its public portrayal and the perception of existing and prospective clients. A major failure of project management or delivery could, accordingly, impact our ability to win future work.

The Group operates quality control systems, many of which are externally accredited and are designed to enable our employees to provide a consistently high standard of work.

Litigation

A failure to deliver our services in accordance with our contractual obligations may lead to a risk of the Group becoming involved in litigation. In addition, as the contracting environment has evolved, clients in some of our businesses have sought to transfer certain risks to the consultants it engages.

The internal review processes operated by the Group seeks to ensure that contractual risks are properly scrutinised and mitigated as far as possible, whilst the management and quality control systems highlighted above minimise the risk of shortfalls in performance that may give rise to claims against the Group. Notwithstanding this, from time to time the group receives claims from clients against which appropriate professional indemnity insurance is maintained. The Board reviews claims of significance on a regular basis and is satisfied that adequate financial provision has been made in respect of any uninsured liabilities.

Business Acquisitions

The development of the Group’s business continues to be supported by acquisitions. The risks here can be of a different nature as was demonstrated in 2015. Acquisitions in the oil and gas sector which had performed well following integration into the Group suffered the effect of the contraction of expenditure by oil gas clients. As this is expected to continue impairments have had to be made to related assets held on the balance sheet. Additionally a failure to identify acquired liabilities or to integrate acquired businesses could have an adverse impact on the Group’s performance and prospects.

Detailed due diligence is performed on all potential acquisitions drawing upon both internal and external resources designed to prevent this. This will include an assessment of the ability to integrate the acquired business within the Group and its control environment. It cannot, however, identify macro events which occur some years later. The integration of the acquisitions made in 2014 has been successful and work in relation to those made during 2015 is proceeding well.

The other principal risks faced by the Group, as listed below, are of significantly less importance in terms of the scale of impact they might have on profit.

Engagement with the Nuclear Sector

RPS advises clients operating in the UK nuclear energy and nuclear defence sectors. The annual value of our work in these niche markets in recent years has consistently been over one percent but less than two percent of the Group’s annual fee income.

RPS advises nuclear industry clients on environmental, planning and risk management matters as independent consultants. As such, RPS employs no ‘nuclear site workers’ though we have a small handful of consultants who are seconded to offices operated by clients such as Sellafield Ltd, AWE, Magnox and EDF.

Work undertaken at nuclear energy or nuclear defence clients’ premises is for the purpose of reviewing controlled documentation and providing independent risk management advice on their safety procedure documentation. The client buildings that a few of our employees work at on secondment are all, without exception, office premises not subject to any radiological protection measures, though admittedly a couple of them are located at one end of very large nuclear licensed sites.

So, to summarise, RPS is not designing, engineering, manufacturing, supplying materials or components, commissioning, operating or decommissioning any nuclear facilities as such. RPS does provide town planning, environmental and risk management consultancy advice often as a fully integrated commercial service. This work is helping to drive improvements in nuclear safety. In particular our work with nuclear energy clients is also making a positive contribution to three UK government objectives through the:

1) implementation of appropriate environmental mitigation measures.

2) safeguarding of the nation’s security of energy supply.

3) eventual establishment of a low carbon economy.

 

RPS Group Plc, including its UK registered subsidiaries, is a signatory to the NDA's supply chain charter a copy of which can be found here.

Nuclear Safety FAQs

Q1: What is RPS’s policy as regards unplanned nuclear plant shut-downs and does it meet the minimum standards set by UK legislation (or by other legal jurisdictions where applicable) or some higher standard or code of practice which includes a commitment to continuous improvement?

A1: Were RPS to become a party to a contract involving the operation of equipment used to manage a nuclear plant shut-down or involving the possible operational management or supervision of an unplanned nuclear plant shut-down, our externally certified management systems will ensure such an eventuality is identified as a risk and will be mitigated appropriately in the context of the contract and according to the required standards.

Q2: Does RPS have a management system in place to address unplanned nuclear plant shut-downs and does this management system meet the minimum regulations and standards set by UK legislation (or by other legal jurisdictions where applicable) or some higher standard or code of practice which includes a commitment to continuous improvement?

A2: Were RPS to become a party to a contract involving the operation of equipment used to manage a nuclear plant shut-down or involving the operational management or supervision of an unplanned nuclear plant shut-down our externally certified management systems will ensure such an eventuality is identified as a risk and will be mitigated appropriately in the context of the contract and according to the required standards.

Q3: Do RPS’s policies or procedures address radiation incidents and events and do the company’s policies and procedures meet the minimum regulations and standards set by UK legislation (or by other legal jurisdictions where applicable) or some higher standard or code of practice which includes a commitment to continuous improvement?

A3: Were RPS to become a party to a contract involving the operational management of radiation incidents or events our externally certified management systems, including our policies, procedures and codes, will ensure the risks are identified, managed and controlled appropriately in the context of the contract and according to the required standards and legislation.

Q4: Does RPS have a management system in place to address radiation incidents and events and does this management system meet the minimum regulations and standards set by UK legislation (or by other legal jurisdictions where applicable) or some higher standard or code of practice which includes a commitment to continuous improvement?

A4: Were RPS to become a party to a contract involving the operational management of radiation incidents and events our externally certified management systems, including our policies, procedures and codes, will ensure the risks posed by radiation incidents and events are identified, managed and controlled appropriately in the context of the contract and according to the required standards and legislation.

Q5: What is RPS’s policy or code of practice as regards radiation hazard assessment (risk and safety) and do the company’s policies and procedures meet the minimum regulations and standards set by UK legislation (or by other legal jurisdictions where applicable) or some higher standard or code of practice which includes a commitment to continuous improvement?

A5: Were RPS to become a party to a contract involving ionising radiation our externally certified management systems, including our policies, procedures and codes, will ensure that radiation hazard assessments covering both risk management and health and safety are conducted, managed and controlled appropriately in the context of the contract and according to the required standards and legislation.

Q6: Does RPS have a management system in place to address radiation hazard assessments and does this management system meet the minimum regulations and standards set by UK legislation (or by other legal jurisdictions where applicable) or some higher standard or code of practice which includes a commitment to continuous improvement?

A6: Were RPS to become a party to a contract involving ionising radiation our externally certified management system, including our policies, procedures and codes, will ensure that radiation hazard assessments covering both risk management and health and safety are conducted, managed and controlled appropriately in the context of the contract and according to the required standards and legislation.

Q7: What are RPS’s policies or codes of practice as regards radiation exposure and radiological protection for its employees, subcontractors, client personnel and the community and do the company’s policies and procedures meet the minimum regulations and standards set by UK legislation (or by other legal jurisdictions where applicable) or some higher standard or code of practice which includes a commitment to continuous improvement?

A7: Were RPS to become a party to a contract involving ionising radiation our externally certified management systems, including our policies, procedures and codes, will ensure the risks associated by radiation exposure and the requirements for the radiological protection of our employees, subcontractors, client personnel and any members of the local community in the vicinity are all identified, managed and controlled appropriately in the context of the contract and according to the required standards and legislation.

Q8: Does RPS have a management system in place to address radiation exposure and radiological protection for its employees, sub-contractors, client personnel and the community and does this management system meet the minimum regulations and standards set by UK legislation (or by other legal jurisdictions where applicable) or some higher standard or code of practice which includes a commitment to continuous improvement?

A8: Were RPS to become a party to a contract involving ionising radiation our externally certified management systems, including our policies, procedures and codes, will ensure the risks associated by radiation exposure and the requirements for the radiological protection of our employees, subcontractors, client personnel for whom we may be responsible and any members of the local community in the vicinity are all identified, managed and controlled appropriately in the context of the contract and according to the required standards and legislation.

Q9: What are the RPS’s policies or codes of practice as regards radioactive operational waste and do the company’s policies and procedures meet the minimum regulations and standards set by UK legislation (or by other legal jurisdictions where applicable) or some higher standard or code of practice which includes a commitment to continuous improvement?

A9: Were RPS to become a party to a contract involving ionising radiation or any operational radioactive waste management our externally certified management systems, including our policies, procedures and codes, will ensure the risks are identified, managed and controlled appropriately in the context of the contract and according to the required standards and legislation.

Q10: Does RPS have a management system in place to address radioactive operational waste and does this management system meet the minimum regulations and standards set by UK legislation (or by other legal jurisdictions where applicable) or some higher standard or code of practice which includes a commitment to continuous improvement?

A10: Were RPS to become a party to a contract involving ionising radiation or any operational radioactive waste management our externally certified management systems, including our policies, procedures and codes, will ensure the risks are identified, managed and controlled appropriately in the context of the contract and according to the required standards and legislation.

Q11: What are RPS’s policies or codes of practice as regards radioactive waste decommissioning and do the company’s policies and procedures meet the minimum regulations and standards set by UK legislation (or by other legal jurisdictions where applicable) or some higher standard or code of practice which includes a commitment to continuous improvement?

A11: Were RPS to become a party to a contract involving ionising radiation or any operational decommissioning of radioactive waste or radioactive waste management our externally certified management systems, including our policies, procedures and codes, will ensure the risks are identified, managed and controlled appropriately in the context of the contract and according to the required standards and legislation.

Q12: Does RPS have a management system in place to address radioactive decommissioning waste and does this management system meet the minimum regulations and standards set by UK legislation (or by other legal jurisdictions where applicable) or some higher standard or code of practice which includes a commitment to continuous improvement?

A12: Were RPS to become a party to a contract involving ionising radiation or any operational decommissioning of radioactive waste or radioactive waste management our externally certified management systems, including our policies, procedures and codes, will ensure the risks are identified, managed and controlled appropriately in the context of the contract and according to the required standards and legislation.

Offices Located in High Risk Countries

Of the countries where RPS employs permanent members of staff based at permanent offices, FTSE4Good classes Brazil, China, Indonesia, Iraqi Kurdistan, Ireland, Malaysia, the Russian Federation, Singapore and United Arab Emirates as high risk countries to operate within.

RPS would maintain that Ireland, were the company has been trading for over 25 years, has not been a ‘high risk’ country to operate engineering, planning or environmental consultancy services within for quite some years and should be taken off this list altogether. In 2014, RPS Group employed 382 staff (or 8.43% of its workforce) located at its offices in the Republic of Ireland.

As for the other countries on the FTSE4Good ‘high risk’ list we employ the following number of permanent staff in each country: Malaysia (13); Russian Federation (8), Singapore (6), China (3), Brazil (2), Indonesia (2), UAE (2) and Iraqi Kurdistan (1) which collectively comes to a total of 35 staff or 0.77% of RPS Group’s global workforce.

RPS takes the security and well being of its staff and its subcontractors very seriously indeed. RPS operations staff complete a Travel Risk Assessment prior to the deployment of any personnel overseas. We operate a rigorous internal risk assessment protocol covering all the countries of the world where we have permanent staff located or where we may temporarily deploy staff on field assignments. This system is dynamic and updates daily based on regular contact with all our field personnel, our clients and other business associates that we deal with in each country. Our international risk management database operators based in the UK also have access to real time security situation updates to which they have privileged access by virtue of their previous employment in the security services. RPS has an extensive Emergency Response Procedure as part of its HSE Management System. Risk management reports are updated as required and in the event of a security incident or an emergency situation staff and subcontractors are contacted directly if possible and advised on what steps to take for their own safety. On the rare occasions this is required, RPS has evacuated its staff to a country of relative safety.

During 2014, it was necessary to mobilise Mike Powell our HSSE Manager at short notice into Kurdistan in order to initiate our emergency response plan from within Erbil. He helped to facilitate through a coordinated effort between the UK-based Risk Management Team and our RPS Energy offices in Houston and Calgary the extraction of all RPS field staff and sub-contractors through a mixture of air carriers/chartered flights and safer overland evacuation routes into South East Turkey and onto forward destinations.

NETS Award for RPS Road Safety Adviser

World Health Organisation figures show that 1.2 million people are fatally injured each year on roads globally, with non-fatal road traffic accident injury statistics worldwide exceeding 20 million annually. As traffic volumes increase the projected annual figure for road transport accident fatalities by 2030 is a possible 2.3 million unless serious focused action is taken to reduce the risks significantly.

More than 90% of road traffic deaths and injuries occur in low and middle income countries and a number of large businesses operating globally are amongst those working together to promote initiatives to reduce these statistics through the Network of Employers for Traffic Safety (NETS).

Around 3,500 businesses take part in NETS' annual Drive Safely to Work Week – held in October – the latest campaign focused on the need to make employee road safety a part of an employer's safety culture.

Martin Hoogenraad, a Safety Consultant from the RPS Delft office has been seconded to Shell for four days a week for six years (since 2009). He works closely with Shell's Global Road Safety Manager, and has informed Shell's input to the NETS' Comprehensive Guide to Road Safety.

The Guide was developed as part of NETS' mission to assist employers in advancing global road safety through providing guidance on various stages of road safety program development.

Road transport is one of the highest risk activities for Shell. Over the years Shell has managed to drastically reduce the number of road transport fatalities and injuries.

By helping to develop the NETS Guide, Shell shares its road safety knowledge with other companies, thereby contributing to the WHO's road safety goal to save millions of lives.

Martin van Hoogenraad of RPS was honoured in October 2014 with a road safety award at the annual NETS meeting recently held in Orlando, recognising his valuable contribution to the NETS Guide. “It was a surprise and a great honour for me to receive the award. I see it as an acknowledgement that more and more companies and organisations realize that road transport is one of the most dangerous activities for their employees and contractors and that appropriate controls need to be put in place to reduce the risks” says Martin.