Most important risks and opportunities for Stedin Group in 2019
This section describes the most important risks and opportunities for Stedin Group. For information about our financial reporting risks, see Judgements, estimates and assumptions as well as Management of financial risks in the Financial Statements.
Connection of risks and opportunities to strategic spearheads and material topics
Strategic spearheads | Change | |||||
|---|---|---|---|---|---|---|
Risk | Category | Material topics |
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| |
Cyberattack | Operational | Data security, privacy and cybersecurity – Supply security – Reputation | ● | ● | ||
Unavailability of enough people with the required technical competences | Operational | Sufficient technical/IT staff – Training and development | ● | ● | ||
IT landscape insufficiently prepared for the future | Strategic | Smart grids, data technology and innovation | ● | ● | ||
Agility of the organisation | Strategic | Organisation's capacity for change – Reputation | ● | ● | ● | |
Uncertainties concerning changes in laws and regulations | Compliance | Stakeholder dialogue and environment | ● | |||
Uncertainties concerning long-term financing | Financial | Economic, financial performance – Investing in infrastructure | ● | ● | ||
Impact of accidents | Safety | Safety at work and in the environment – Reputation | ● | |||
Insufficient connection and transmission capacity | Strategic | Investing in infrastructure – Contributing to the energy transition – Customer satisfaction – Stakeholder dialogue and environment | ● | ● | ● | |
Loss of communication network | Operational | Contributing to the energy transition – Reputation | ● | ● | ||
Opportunity | ||||||
Strategic supplier relationships | Stakeholder dialogue and environment Social responsibility in the supply chain | ● | ||||
Disruptive technologies and methods | Smart grids, data technology and innovation | ● | ||||
Provide stakeholders and customers with more self-services | Contributing to the energy transition – Reputation – Customer satisfaction – Stakeholder dialogue and environment | ● | ● | |||
Building a future-proof IT landscape | Smart grids, data technology and innovation – Data security, privacy and cybersecurity | ● | ● | |||
+ New in 2019 / = Equal to 2018 / ↑ Increased relative to 2018 / ↓ Decreased relative to 2018
Categories of risks and opportunities
Stedin Group assigns its strategic risks and opportunities to five categories, from low to top. In evaluating risks and opportunities, we compare the likelihood of their occurrence with their potential impact on the achievement of our three strategic spearheads. This comparison led to the risk matrix below for 2019.
Risks
Title of risk: | 1 Cyberattack |
|---|---|
Description of risk | As a result of its strategic location as well as its social and economic importance, the Stedin Group infrastructure is an attractive target for cyberattacks. A cyberattack can endanger the continuity of Stedin Group and society. |
Risk tolerance | Avoiding |
Change from 2018 | = |
Risk assessment | Top |
How did we respond to this fact in 2019 | Cybersecurity has been more strongly embedded in the business processes. We worked on knowledge, competences and resources in 2019, thus increasing Stedin Group's ability to withstand cybersecurity threats. Stedin Group's CEO is a member of the Cyber Security Board on behalf of the critically important sectors. |
+ New in 2019 / = Equal to 2018 / ↑ Increased relative to 2018 / ↓ Decreased relative to 2018
Title of risk: | 2Unavailability of enough people with the required technical competences |
|---|---|
Description of risk | Due to ageing and tightness in the labour market, there is a risk that we will no longer have enough staff with the required technical competences. |
Risk tolerance | Avoiding |
Change from 2018 | ↓ |
Risk assessment | High |
How did we respond to this fact in 2019 | The Strategic Personnel Plan provides us with new insights that improves our risk mapping. Jointly with our industry peers, we are addressing this challenge by developing a vision, exchanging initiatives and learning from each other. We have launched a review into strategic recruitment, recruitment abroad and position-based recruitment. Lastly, we have started a labour market advertising campaign. |
Title of risk: | 3IT landscape insufficiently prepared for the future |
|---|---|
Description of risk | Stedin Group needs an integral IT infrastructure in order to support the future primary processes and facilitate the energy transition. |
Risk tolerance | Neutral |
Change from 2018 | = |
Risk assessment | Top |
How did we respond to this fact in 2019 | A range of actions were initiated in the past year to set up the IT landscape for the future. For example, the transformation to cloud solutions was pursued in full. The speed of changes due to the energy transition, in combination with the digital transformation, is growing. |
Title of risk: | 4Agility of the organisation |
|---|---|
Description of risk | The culture and conduct of Stedin Group must change in accordance with the changes in the energy landscape so as to fulfil its role in the energy transition. |
Risk tolerance | Neutral |
Change from 2018 | = |
Risk assessment | High |
How did we respond to this fact in 2019 | The managers are important in successfully executing our strategy. Together with the Board of Management, they translated the strategy into actions for their teams during two kick-forward sessions in 2019. We retain new talent for Stedin by means of the programme for our management trainees (Makers of the Future). We also continue performance management to support the management qualities of our managers. |
Title of risk: | 5Uncertainties concerning changes in laws and regulations |
|---|---|
Description of risk | National or European governments may take undesirable decisions on the role of regional grid managers. This situation can lead to uncertainty about the implementation of our strategy. |
Risk tolerance | Averse |
Change from 2018 | = |
Risk assessment | High |
How did we respond to this fact in 2019 | Stedin Group closely follows developments in Europe and The Hague, and it is represented in the national lobby, preferably through the industry association Netbeheer Nederland. Our Regulation department participates in the European lobby. Stedin Group is aware of amendments to existing laws and new laws well in advance. In 2019, we devoted special attention to the dialogue with local authorities and other stakeholders on the future of the heating market. In addition, we focus very closely on the debate about the solutions to the problems with regard to sufficient grid capacity. |
+ New in 2019 / = Equal to 2018 / ↑ Increased relative to 2018 / ↓ Decreased relative to 2018
Title of risk: | 6Uncertainties concerning long-term financing |
|---|---|
Description of risk | A regulation model that is not aligned with the financial challenges of the grid managers in the energy transition entails a risk of further cost increases with regulated revenues that do not increase at the same pace. This can endanger the availability of financing. |
Risk tolerance | Avoiding |
Change from 2018 | = |
Risk assessment | Top |
How did we respond to this fact in 2019 | To ensure that we can undertake the required investments, critically assessing the effectiveness of our own operations and responding to the developments of financial markets as well as laws and regulations remain necessary. This risk has also been discussed with our stakeholders (See Report of the Supervisory Board, Audit Committee). It became clear in 2019 that we will need to take far-reaching measures if the present regulatory regime remains unchanged, which is not desirable. We are in consultation with all parties involved, including the Ministry of Economic Affairs and Climate Policy as well as the Netherlands Authority for Consumers and Markets, both directly and within the framework of Netbeheer Nederland. |
Title of risk: | 7Impact of accidents |
|---|---|
Description of risk | Due to insufficient safety awareness and learning ability, there is a risk of unsafe situations. As a consequence, Stedin Group could suffer reputational damage and be subject to sanctions imposed by regulators. |
Risk tolerance | Averse |
Change from 2018 | = |
Risk assessment | High |
How did we respond to this fact in 2019 | Our multi-year safety programme is based on the principles of the High Reliability Organisation (HRO). We completed phase 1 ‘Raising awareness’ in 2018 and we started on phase 2 ‘Updating knowledge’. The entire Stedin Netbeheer organisation obtained certification for level 3 of the Safety Culture Ladder in 2019. We commenced preparations for phase 3 ‘Embedding routines’. |
Title of risk: | 8Insufficient connection and transmission capacity |
|---|---|
Description of risk | If we fail to reinforce our grids soon enough, it is possible that we may not be able to provide transmission capacity for our customers. In that situation, we will be unable to comply with customers' requirements, customers will have to cancel their projects and this situation will delay the achievement of the climate objectives. |
Risk tolerance | Neutral |
Change from 2018 | + |
Risk assessment | Top |
How did we respond to this fact in 2019 | Stedin is party to all relevant Regional Energy Strategies, which ensures that the energy infrastructure is properly taken into account. We publish capacity maps so our customers know where potential bottlenecks may arise in the grid. In addition, we have adopted a more proactive investment approach and have drawn up ‘Master plans’ that provide insight into the infrastructure that is necessary to achieve the objectives by 2050. |
+ New in 2019 / = Equal to 2018 / ↑ Increased relative to 2018 / ↓ Decreased relative to 2018
Title of risk: | 9Loss of communication network |
|---|---|
Description of risk | Due to uncertainties concerning the availability of our communication networks (GPRS and CDMA), there is a risk that we will be unable to read out information from the smart meters. |
Risk tolerance | Avoiding |
Change from 2018 | ↑ |
Risk assessment | Top |
How did we respond to this fact in 2019 | The frequency for CDMA has been renewed for only 4 years. We have lodged an objection to this short term with a view to the required long-term continuity. As regards GPRS, we are in extensive negotiations with the commercial telecommunication parties in order to extend the service provision of GPRS to beyond 2025. We are also working on a next communication platform (LTE-M) to replace GPRS. |
Opportunities:
Title of opportunity: | 1Strategic supplier relationships |
|---|---|
Description of opportunity | Strategic relationships with suppliers increase our responsiveness and improve our cost-effectiveness. |
Change from 2018 | ↑ |
Opportunity assessment | High |
How did we respond to this fact in 2019 | The awareness of strategic supplier relationships increased further in the past year, partly due to incidents in the supply chain, and resulted in the creation of a Strategic Vendor Board. |
Title of opportunity: | 2Disruptive technologies and methods |
|---|---|
Description of opportunity | We see an opportunity to apply new technologies and utilise data effectively to improve the performance of our task within the energy system, boost our innovative potential, work more efficiently and facilitate the energy transition. |
Change from 2018 | = |
Opportunity assessment | High |
How did we respond to this fact in 2019 | In 2019, we successfully experimented with hydrogen in the natural gas grid as well as local energy generation and exchange in combination with blockchain technology. We are also working with new models to make the heat transition transparent and manageable. |
Title of opportunity: | 3Provide stakeholders and customers with more self-services |
|---|---|
Description of opportunity | By assisting stakeholders and customers, and by giving them control, we enable them to improve the sustainability of the energy system. |
Change from 2018 | ↑ |
Opportunity assessment | Top |
How did we respond to this fact in 2019 | We collaborate more intensively with customers, municipalities, housing associations, water companies and heating companies to improve the sustainability of the built environment. Stedin Group is aiming for a shared plan at a regional, urban and district level. In addition, Stedin is digitising its customer processes, as a result of which customers can take the helm themselves. |
+ New in 2019 / = Equal to 2018 / ↑ Increased relative to 2018 / ↓ Decreased relative to 2018
Title of opportunity: | 4Building a future-proof IT landscape |
|---|---|
Description of opportunity | Stedin Group is increasingly becoming a data- and IT-driven organisation. By building a future-proof IT landscape, we are increasing our flexibility and our innovative potential. |
Change from 2018 | = |
Opportunity assessment How did we respond to this fact in 2019 | High The speed of changes due to the energy transition in combination with the digital transformation is growing. In order to keep pace with that speed, a change process was launched in the second half of 2019 to improve the IT structure and its positioning within the organisation. |
+ New in 2019 / = Equal to 2018 / ↑ Increased relative to 2018 / ↓ Decreased relative to 2018
