P R I N C I PA L R I S K S
P R I N C I PA L R I S K S
STRATEGIC
CONSEQUENCES
MITIGATIONS
OPPORTUNITIES
OPERATIONAL
CONSEQUENCES
MITIGATIONS
OPPORTUNITIES
Given our global distribution
of sales, changes in the
We continue to closely
Global economic growth in
Distributional channels and
Sales and service
Technological advances are
A network which is rightsized
for the market will lead
2
Global economic and
4
monitor and risk assess global
developments, implementing
mitigation plans where
developed and emerging markets
presents opportunities to increase
sales. Global growth and rising
incomes create opportunities
both in new and existing
retailer network
performance directly
changing relationships with
geopolitical environment
Jaguar Land Rover is exposed to
changes in the global economic
and geopolitical environment, as
well as other external factors.
Trade tensions, protectionism,
wars, terrorism, natural disasters
and humanitarian challenges may
adversely impact our business,
more recently the COVID-19
pandemic crisis and Brexit
external environment could
have a significant impact on
the global demand for our
vehicles. Our global sourcing
strategy and supply chain
impacts customer
customers through our digital
presence in an ever-connected
world. Market and retailer demand
is closely monitored in order to
optimise our retailer network and
invest in growth at the right place
and time. Digital channels such as
online sales and remote servicing
via SOTA improves customer
service and helps to maintain
and strengthen the relationship
between us, our retailers and
customer in the normal course
of business and during times of
uncertainty and disruption.
to efficient investment
In order to optimise market
performance, sales channels must
be aligned to the buying habits
of our customers through the
appropriate mix of advanced
and traditional methods. Our
global presence must align to
market demand, with trained
and capable people serving the
needs of our customers. Service
and repair capacity has to be
correlated to the needs of the
customers within each region.
satisfaction and retention,
in addition to reputational
damage for the brands.
Failure to deliver sales due
to retailer capacity, poor
service or capability will
lead to uncompetitiveness
within particular markets.
Due to COVID-19 enforced
lockdowns across all of our
key regions has adversely
impacted our retailer
to optimise sales. Putting our
customer first by quickly and
robustly resolving problems will
improve customer satisfaction
and retention. Beneath all of
this, the strength of our brands’
reputation in the market
appropriate (e.g. COVID-19
resilience planning). We also
continue to maintain our
geographical markets as well as
new and existing segments.
resilience could be negatively international manufacturing
affected by disruption caused footprint and a balanced retail
by external factors beyond
sales profile across our key sales
our control. COVID-19 as had regions.
a significant impact on our
financial performance and
business operations.
will lead to growth compared
to the competition.
uncertainty as we move towards
the end of the transition period on
network and therefore
vehicle sales
3
1 December 2020.
3
Brand positioning
Our potential inability
The launch of the new Defender,
We continue to strengthen our
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7
8
IT systems and security
New and emerging technologies
generate ever increasing levels
of known and unknown threats
to internet-connected devices
including vehicles, whilst recent
global security incidents seriously
impacting both large and
small organisations indicate an
unprecedented increase in the
number of cyber attacks against
corporate entities.
The loss of sensitive and/
or personal data could lead
to legal action and fines of
up to 4 per cent of global
turnover (under GDPR),
together with negative
reputational impacts.
We will maintain a security
strategy to achieve “Security resourcing an ongoing security
By Design” by implementing strategy, we will create a strong
consistent, comprehensive security information security control
governance and procedures as environment by proactively
well as provide education for staff, monitoring and reacting to
vendors and suppliers to embed emerging cyber threats, and
By implementing and
to successfully position,
with industry leading capabilities brands by creating greater brand
Brand positioning is becoming
increasingly challenging as the
dynamics of the automotive
market (e.g. automated driving,
electrification, digital connectivity)
and the competitive pressures and
maintain and articulate the
strength of our brands as
well as failing to develop new
products/technologies that
meet customer preferences,
or suffering delayed product
from both a physical and digital
association through innovation,
perspective, reinforces our brand technological advancement and
strategy. We regularly monitor
the perception of our brands
to quickly identify and address
uncertainties that may arise to
inform how we articulate brand
values to customers.
customer trends and feedback
into our expanding and evolving
product portfolio and services.
With a number of upcoming
launches we will further enhance
our customer offering through
new/enhanced models and
Successful attacks against
our IT infrastructure could
lead to major disruptions to
our business operations, up
to and including impacting
our ability to make and
sell products for extended
periods (3 months +).
best practices. We are also building protect the Company from
a Security Operations Team using attacks. As new technologies
internal and cloud-ready tools to and business practices are
detect and address current and adopted, we will also embed
emerging cyber security threats. new security technologies and
controls to ensure that risk
to the business is reduced to
acceptable levels.
disruption from existing automotive launches, could impact
manufacturers and new entrants.
demand for our products.
powertrain/feature innovation.
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Rapid technology change
Technology in the automotive
industry is evolving rapidly,
particularly with respect to
autonomy and connectivity. Falling
behind with technology trends will
Any delay in the launch of
technologically intensive
We continue to prioritise the
development of technology-
We engage with the relevant
industry and government
Supply chain disruptions
Jaguar Land Rover ’s ability
to supply components to
Supply chain disruptions
if not managed, could
Jaguar Land Rover operates a
robust and effective Supply Chain
Risk Management governance
framework within Global
Operating an effective Supply
Chain Risk Management
governance framework
products, or if the technology enabling platforms and feature
partners to support the delivery
in our products becomes
relatively obsolete, could
impact sales as customers
move to purchase products
delivery. Ensuring alignment with of autonomous, connected,
our Destination Zero mission and electrified and shared (ACES)
have an adverse effect
production volume,
provides us with the
delivering experiences people
love, for life.
technologies. Continued
Manufacturing operations at the
required time is of paramount
importance in achieving production
schedules and consumer demand.
The importance of managing this
risk has been emphasised through
the unprecedented COVID-19 crisis
and its effects on our global supply
base.
revenue and profitability,
customer satisfaction and
reputation. As a result of
the enforced lockdowns
due to COVID-19 our supply
base was impacted and we
enacted our own temporary
shutdowns at the China joint
venture plant in January and
elsewhere in March
Purchasing with full engagement
from the senior management
team. It is designed to proactively
and systematically identify,
prioritise and manage the impact
of potential supply events within
our business and such active
monitoring processes has been key
in managing through the disruption
caused by COVID-19 with our
suppliers .
opportunity to proactively
support and engage with our
supplier base in diagnosing and
mitigating potential disruptions
before they occur
investment in the reskilling of our
workforce enables us acquire the
new skills necessary in achieving
ACES targets.
increase the risk of not meeting the from our competitors.
expectations of both our new and
existing customers.
LEGAL & COMPLIANCE
CONSEQUENCES
MITIGATIONS
OPPORTUNITIES
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Environmental regulations
We incur additional
We have invested substantially We were the first premium
in the development of our manufacturer to introduce a
next generation modular battery electric vehicle into
architecture, the in-house
manufacture and continued
refinement of our internal
combustion engines and
electrification technologies,
including mild and plug-in
hybrids as well as battery
electric vehicles. We retain
an EU derogation permitting
alternative fleet average CO
compliance costs, including
incremental investment, to
avoid facing significant civil
and regulatory penalties, and
our competitors may gain an
advantage by adopting new
and compliance
Human capital
Failure to develop new
The Jaguar Land Rover Academy
has recently been established to
focus on developing the critical
commercial and technical skills
required for the future. Our
The transformation of our
business presents us with a
unique opportunity to engage
our people in a meaningful way
around the future of Jaguar
Land Rover and to participate
in both shaping and delivering
the changes to help build an
organisation and culture for
future success.
We are subject to a rapidly
skills and capabilities will
impact on our ability to
Jaguar Land Rover ’s Destination
Zero mission requires an engaged
workforce with core capabilities
in new and emerging skill areas
and a collaborative and innovative
culture for our transformation
to be successful. Our purpose of
mainstream production with
the Jaguar I-PACE. We have
introduced PHEV technology in
Range Rover, Range Rover Sport
with Velar, E-Pace, Discovery
Sport and Evoque PHEV models
being introduced in Fiscal 20/21.
From this year forwards we will
have an electrified option in every
nameplate. The introduction
of manufacturing both electric
drive units (Engine Manufacturing
Centre) and battery modules
evolving regulatory landscape with
associated laws, regulations and
policies that all impact the vehicles
deliver innovative products
and services . COVID-19
has resulted in a significant
proportion of the workforce
to be furloughed under the maintained clear dialogue with our
under the UK governments workforce during the pandemic,
job retention scheme. Robust made critical changes to ensure a
protocol and guidelines to safe return to work and continue
support a safe return to work to support our employees
for our employees has been under a number of personal and
adopted including strict professional initiatives.
employees safety and wellbeing
is paramount and we have
we produce and our manufacturing emissions-reducing and fuel-
facilities (e.g. CO and NO
efficient technologies before
we do.
2
x
emissions and fuel economy).
‘
Experiences people love for life’
has the safety and well-being of our
people at its core, and necessitates
an approach which focuses on
customer journey and service
capabilities.
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targets.
social distancing measures.
(
Battery Assembly Centre)
provides us with the opportunity
to strengthen our in-house
electrification capability.
FINANCIAL
CONSEQUENCES
MITIGATIONS
OPPORTUNITIES
1
Competitive business
If we are unable to deliver
these objectives, our
ability to achieve our
financial targets may limit
our capability to invest
and fund future products
and technologies.
Project Charge and Charge+ have so far Enhanced overall business
delivered £3.5b of cost and cash savings, efficiency will yield greater
with a further £1.5b targeted over FY21. opportunities for growth
Longer term, Project Accelerate aims to and continued investment
transform our business by improving sales in our product portfolio and
performance, quality and cost efficiency new technologies.
of future products. Furthermore, we are
introducing our next-generation Modular
Longitudinal Architecture (MLA) and
continue to collaborate with partners
to develop new technology e.g. Electric
1
0
Unethical and prohibited
business practices
Non-compliance with ethical
and/or legal practices may
materially impact our
Our Code of Conduct sets
out the behaviours that we
expect of our employees,
including conforming to the
highest moral and ethical
standards and complying with
We are committed to conducting
business in an ethical manner to
instil a reputation of trust and
reliability. Such qualities foster
greater business relationships with
suppliers, retailers, governments
efficiency
Delivering on our business and
strategic objectives is key to
sustaining profitable and cash
accretive growth. Any uncertainties
that materially compromise the
achievement of our objectives
could unfavourably impact
our operational and financial
performance.
Our international activities
reputation and could result
in restrictions being placed
on our operations, causing
business disruption.
expose us to increasingly diverse
and complex legal and other
frameworks (e.g. GDPR) in a variety
of jurisdictions and, as such, we
need to maintain legal and ethical
standards across the global
locations in which we operate.
applicable laws, including those and partnerships with other third
COVID-19 as had a
relating to anti-bribery and
corruption, data protection, fair
competition, sanctions and
export controls.
parties.
significant impact on our
business and uncertainty
remains over the long
term concequences to our Drive Units (BMW).
business.
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JAGUAR LAND ROVER AUTOMOTIVE PLC
Annual Report 2019/20
