LucyGroup-ARA2024_spreads web ready_FINAL

RISK MANAGEMENT CONTINUED

BUSINESS OVERVIEW STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION

Risk and impact

Mitigation/controls

Risk and impact

Mitigation/controls

7. Regulatory and compliance

9. Safety

The Group has implemented policies and procedures to address compliance risk. We assess all relevant regulatory developments and review our internal processes, policies and training programmes to ensure that we both mitigate risks and meet evolving compliance requirements. Management across the business makes the necessary changes to control either environments or product designs as necessary. Management continues to review and adapt the business model to meet requirements in relevant markets. Group management receives annual assurance on regulatory compliance from all subsidiary management boards. We work with internal and external stakeholders to ensure they abide by our code of conduct, and we complete due diligence over our key external stakeholders. Management continue to monitor political and financial events in key markets and to adjust strategy accordingly. Management constantly review the prevailing sanction regimes across the world, and ensure that the Company complies with all relevant sanctions. Management teams are vigilant over input costs and adjust sales pricing as required. Business continuity plans are implemented if any of our facilities become unavailable for a prolonged period. Management teams are working towards opening new markets to diversify risk, and regularly review our longer-term strategy to ensure that our products and services are not precluded from any key markets. Before travelling to high-risk countries, employees undertake risk assessments to manage, mitigate and, where possible, eliminate risks associated with political instability and/or terrorist activity.

The Group has a health and safety policy, procedures and training in place across all sites. Health and safety experts are employed throughout the Group. Relevant employees are given personal protective equipment (PPE) and other equipment appropriate for their environments. We have engineers that work on third-party sites. They hold the requisite qualifications for their work in potentially dangerous environments, undertake full risk assessments before starting work, and follow the relevant health and safety guidelines. The Board regularly receives and reviews health and safety reports from all businesses, which includes results from audits, near misses and accidents. Near misses and adverse events are monitored to ensure that we continue to improve the safety environment for all stakeholders. We continue to ensure our products comply with relevant safety requirements and provide safe working environments for our employees, customers and the wider public. We assess our subcontractors to ensure that they meet relevant health and safety requirements. The Group seeks ways to develop and extend its supplier base to reduce any over-reliance on specific suppliers and to improve competitiveness. The Group works closely with all suppliers to understand potential issues ahead of time to allow us to continue to produce the goods our customers require. Management continue to monitor the political situation across the world and can invoke appropriate contingency plans when necessary.

Censure from government or regulators for non-compliance with laws and regulation. Failure of internal control process leads to financial losses. Failure to respond to significant changes in legislation or regulations leaves the Company exposed to censure, or obsolete products or services within our portfolio. Continued use of compliance and regulation by countries seeking to create entry barriers for non-domestic suppliers of goods and services, to protect domestic enterprises and in response to wider political disputes across the world. Countries choosing to trade only with neighbouring countries or those deemed politically friendly (‘friendshoring’). Some governments around the world face domestic pressures to support localisation of goods and have implemented measures that may prevent access to their markets. Conflict continue across the world, which may impact world energy markets and trade routes. This, in turn, could lead to inflationary pressures within the markets for raw materials, which could affect pricing. These conflicts may also see more proxy wars in other regions or significant cyberattacks on key infrastructure, which could impact on customer resilience. With a significant number of elections undertaken around the globe in 2024, we may see some changes in policy direction as previous incumbents have been removed by the electorate. 8. Economic and political instability

Some colleagues work within high-risk industries and travel extensively across the world. Our products are used in the distribution of electricity, which has its own inherent risks to both our employees and members of the public.

10. Supply chain

In the post-Covid world, the emphasis and customer expectation has shifted within supply chains to resilience and sustainability, along with the continuing focus on value. Global conflicts and political instability may disrupt supply chains. Both geopolitical and sustainability pressures may push businesses in certain jurisdictions to either onshore or `friendshore’ supply chains to provide security of delivery and to decarbonise products.

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Lucy Group Ltd Annual Report & Accounts 2024

LUCYGROUP.COM

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