A business must take some risks to create value. Having a risk management policy allows Q-Park to take risks in a managed and controlled manner. Q-Park makes strategic, operational, financial, and reputational risks controllable by carefully weighing risks and returns against each other. Effective risk management is integrated into Q-Park’s daily operations.
Q-Park deploys a top-down risk management policy in which strategic risk management is executed at corporate level and operational risk management in the regions. Responsibility for operational risk management lies primarily with regional and functional management. The Executive Board however bears the ultimate responsibility for managing the risks the company faces.
Risk management and internal control
Ongoing identification and assessment of risks is part of Q-Park's governance and periodic business review. Q-Park's Enterprise Risk Management (ERM) policy is designed to provide senior management with an understanding of the key business risks the company faces. It also provides methods and processes to manage the risks that might hamper the business achieving key objectives and to initiate actions required to mitigate these risks.
The Executive Board and the Audit Committee periodically review these risks and the related mitigation controls and procedures. These bodies provide complementary insights into existing and emerging risks that are subsequently included in the policy. Q-Park's ERM policy influences the formation of controls and procedures, and the focus of business planning and performance process.
Factors which determine Q-Park’s risk appetite include the international spread of its business, the robustness of its balance sheet, strength of cash flows, and a commitment to conservative financial management. Q-Park's risk appetite varies per objective and risk category:
- Strategic: Taking strategic risks is an inherent part of how Q-Park does business. In pursuing growth as a strategic ambition, Q-Park is prepared to take risks in a responsible way taking account of our stakeholders' interests.
- Operational: Depending on the type of operational risk, Q-Park takes a cautious to averse approach. We give the highest priority to ensuring the safety of our employees and customers, delivering the highest level of service and protecting the company's reputation.
- Financial: Q-Park pursues a conservative financial strategy, including a balanced combination of self-insurance and commercial insurance coverage.
- Compliance: Q-Park is averse to the risk of non-compliance with relevant laws or regulations, or non-compliance with our own codes, contractual agreements, and covenants.
- Fraudulent and unethical behaviour: Q-Park and all our associates are committed to acting with honesty, integrity, and respect. Q-Park is fully averse to risks relating to fraudulent behaviour and applies a zero-tolerance policy.
The following risk overview highlights the main risks which might prevent Q-Park achieving its strategic, operational, and financial objectives. The risks described are not an exhaustive list of the risks Q-Park faces. There may be additional risks which do not constitute a direct threat in the short-term, or risks which management deems immaterial or otherwise common to most companies, but which could at some time have a material adverse effect on Q-Park's financial position, results, operations, or liquidity.
Risk management measures
Regulatory changes to inner-city parking
National or local governments could implement measures which are potentially unfavourable to the parking sector, for instance as a result of pressure from public opinion, pressure groups, or election results. For example, the debate on banning traffic within city boundaries could adversely affect inner-city parking, resulting in lower revenue, and diminished profitability.
Factors that potentially influence parking prices include pressure from the general public and retailers, political changes, or a long-term fall in GDP. Lower parking prices would significantly impact Q-Park’s profitability and cash flows.
Competitive environment and economic conditions
The parking market is characterised by intense competition between existing players. Competition from new technologies is also disrupting the current parking market, resulting in an increased focus on ICT developments.
Dependency on non-parking business and functional development location
A car parking service is an indirect service which depends on other external factors (e.g. offices, shopping centres, leisure amenities). New consumer behaviour (e.g. online shopping, working from home) or changes in the popularity of certain stores or locations pose a risk of a significant decrease in demand for parking services and, consequently, a decrease in Q-Park’s business and revenue.
Risk management measures
Safety and liability
The safety of our customers and employees is our top priority. If an employee or a customer sustains injury while at work or while visiting one of Q-Park's parking facilities, this could impact Q-Park’s reputation.
Dependency risks, interruptions, and business continuity
Continuity of the company and its business is crucial. Continuity depends on a number of factors, including suppliers. Q-Park is particularly vulnerable regarding PMSs, ICT, and infrastructure.
ICT and information security
Given the increasing use of mobile communication and the professionalism of cybercriminals, the company must focus constantly on continuity of ICT systems and on ensuring the security of crucial information and sensitive customer data (e.g. payment card details, passwords). The theft of crucial or sensitive data could result in reputation damage, information leakage to competitors, as well as claims against the company.
Staffing and retention
Good, experienced, and knowledgeable people are the foundation of Q-Park and its success. The company must ensure that it is able to employ and retain the right people.
Ethics and integrity
Ethics and integrity are important conditions for confidence in Q-Park. Behaviour deemed to be unethical could lead to loss of revenue and reputation.
Risk management measures
Valuation of investment property and goodwill
Q-Park owns a considerable amount of investment property and goodwill. If the economic climate deteriorates and potential fair value adjustments and impairments are not identified, determined, or communicated in a timely fashion, Q-Park could incur reputational damage.
Given that Q-Park is a capital-intensive company, access to external financing is crucial for continuity. A liquidity risk could arise if external financing is not available to Q-Park when refinancing is required.
Interest rate risks
Q-Park has a significant external debt subject to variable interest rates, thereby exposing the company to fluctuations in interest rates. A significant increase in variable interest rates would have a negative impact on results.
Q-Park’s functional currency is the euro. Given that Q-Park also operates in countries with a different functional currency, Q-Park is exposed to fluctuations in those currencies, which may result in unfavourable results.
Compliance and reportingDownload data
Risk management measures
Financial statement does not give a true and fair view
If misstatements are made such that the financial statements do not give a true and fair view of the company's financial position, financial performance, and cash flows, users of the financial statements would be incorrectly informed.
Non-compliance with European and national laws
Changes in the legal and regulatory environment tend to increase the risk of non-compliance with local, national, and international laws and regulations, as well as tax legislation. Failure to comply with applicable regulations could lead to fines, claims, and reputational damage.