2013 Registration document and annual financial report - page 135

Registration Document 2013
Corporate Governance
Risk Management
Operational risks
The Group’s operating presence in a large number of countries
exposes it to geopolitical, terrorist, natural disaster, public health
and other security risks, although the scale of any consequences
arising from such risks is reduced by the fact that our business
activities are by nature widely dispersed around the globe.
risks relating to geopolitical factors, malicious damage
and terrorist threats:
to effectively safeguard against the main
threats identified against Accor establishments, a dedicated
organization has been set up and technical documents prepared
to define and implement a security strategy that is tailored to
the severity of the estimated risks. In certain host countries,
the political situation could deteriorate and lead to a significant
slowdown in business. These circumstances are continuously
monitored and contingency plans have been readied to limit
their impact as far as possible;
public health risks:
Accor tracks on an ongoing basis any public
health risks that could adversely affect its business. In response
to the risk of pandemics, annual updated business continuity
plans are in place to ensure the continuity of its hotel operations
and the health and safety of guests and employees. A program
has long been in place to prevent the development and spread of
legionella bacteria in the hotels. Technical standards have been
defined and preventive maintenance is regularly carried out, with
analyses of samples performed by independent laboratories;
risks related to the economic environment:
in the event of
a sharp slowdown in a regional or the global economy, Accor
could experience a significant falloff in business due to people
travelling less frequently. In this event, austerity plans are in
place to freeze budgets, identify cost-reduction opportunities
and deploy other responsive measures;
risks related to partnerships:
The Group’s relations with hotel
owners, lessors and franchisees are based on mutual trust and
shared interests. However, these relations could deteriorate and
expose the Group to conflictual situations. In addition, the ability
to renew franchise and management agreements depends on
the appeal of our brands;
competition risks:
maintaining the customer appeal of our brands
is a key priority for our teams, who constantly work towards
making Accor an innovation leader and raising its standards to
avoid losing business to competitors. Careful attention is also
paid to the risk of changes in customer behavior in response to
the emerging alternative accommodation solutions offered by
new entrants (furnished rentals, house swaps etc.).
Lastly, the risk of losing control over the distribution of its
products to online travel agencies (OTAs) is an area of major
concern for the Group. Controlling this dependency risk involves
increasing the direct bookings made through Accor websites
and stepping up the loyalty program, both of which will require
the development of state-of-the-art technological systems;
risks of damage to our brand image:
Accor could be faced
with a major media event capable of damaging its brand image.
For example, a health and/or safety incident, a supplier’s practices
or accusations of abetting sexual tourism could lead to a smear
campaign against the Group. In response, tracking tools have
been deployed to detect early warning signs and dedicated
crisis management and communication procedures are ready
to be activated should an event occur. Employees in countries
at risk are also given training in how to detect and prevent cases
of sexual tourism involving minors in hotels;
risks relating to information systems:
Group information
systems could be subject to attacks, such as viruses and
denial-of-service attacks, as well as data theft and technical
failures causing a system shutdown. The Information Systems
Security Department is tasked with securing all of our networks
and systems and managing the applications necessary for our
business continuity. It also regularly performs intrusion tests
on all of our applications assets. In addition, the Internal Audit
Department has a team of auditors dedicated to controlling that
information systems work effectively and securely;
data protection risks:
Accor faces competition from other
hotel groups in deploying its organic and external growth
strategies. In particular, information on strategic, business
and competition-related issues concerning organic growth
and acquisitions, as well as customer-related information, is
considered to be highly sensitive. If such information were to
be disclosed it could have adverse consequences for the Group.
In response to this, measures have been put in place to raise
employee awareness about confidentiality and to enhance the
security and access control of our intranet sites;
employee-related risks:
although management regularly holds
constructive talks with employee representatives, both at head
office and local level, certain strategies and/or financial decisions
could give rise to local disputes or strikes that could adversely
affect the business;
natural disaster risks:
some of the Group’s hotels are located
in countries that are exposed to the risk of natural disasters,
such as hurricanes, earthquakes, tsunamis, tidal waves or
floods. When these risks are foreseeable, temporary protection
measures are put in place. Exercises are also carried out by our
teams in countries subject to seismic risks so that they can
respond effectively in the event of an earthquake;
risk of a major flood in Paris:
if the Seine River were to rise
as high as in 1910, a number of hotels and our head office
located near the banks would be flooded and isolated or possibly
lose their electricity, thereby shutting down their operations.
Business Continuity Plans and Business Recovery Plans have
been prepared to enable certain sites to continue minimum
business operations, to transfer operations to a back-up site
Evry for the head office), or to enable business to resume
as quickly as possible once the installations have been returned
to working order and/or inspected. Regular discussions are held
with Paris civil protection authorities for the purpose of predicting
and monitoring floods.
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