Managing risk and uncertainty It is supported by the Audit Committee and by the Internal Audit function who review the effectiveness of key aspects of the internal control framework. Our risk management processes continue to evolve to support BMT’s growth. Principal risks An unprecedented number of countries have held or are planning elections while many continue to face ongoing economic challenges and high sovereign debt levels. Global economic uncertainty and government spending constraints could weigh negatively on certain areas of the market. While governments are committed to spending more on national defence and sustainability, the makeup of that spend coupled with the need to meet other fiscal commitments could negatively impact the timing, value, and nature of key customer orders in the near term, particularly in the UK. However, in the medium to long term we see growth opportunities in key markets through a renewed focus on national security, on core infrastructure investment, and on transition to clean energy. Risk mitigations for us include maintaining our supplier status in core defence markets, while remaining competitive across all markets. We continue to work very closely with our customers to understand their immediate and longer-term priorities. We are strengthening our internal management reporting capabilities, which combined with closer customer engagement, will enable us to better pre-empt and respond to volatility across our pipeline, particularly in our largest market. We are actively working to rebalance our portfolio across industries and regions which will over time reduce market concentration risks. We have and continue to invest in our delivery organisation, with better through-life project risk management from the bidding phase through contracting and into delivery. The aim is to have the right capabilities engaged at the right time whether those are from sales, commercial, technical, financial or project management teams. We are developing our programme governance to ensure we can anticipate potential issues earlier and respond as needed. Our people are core to what we do and having the right skills, experience, and commitment is key to successful delivery. After a tightening in the recruitment market following Covid we now see more flexibility, and our investment in talent acquisition experts, in our overall employee proposition, and in graduate training programmes are having an impact. However, balancing our capabilities against the future customer demand profile remains a challenge, particularly in periods of order volatility. We are also rolling out a new skills-based system to allow us to map and analyse our capabilities and to inform future planning and development. We work to improve employee wellbeing and more broadly, to protect the health and safety of all stakeholders including our employees, contractors, and third parties. We have implemented a cloud-based global organisational safety software system that facilitates more real-time management and reporting of health and safety risks. While we hold no debt, we still maintain careful cashflow management and funding strategies to allow us to respond to short-term changes in market conditions as well as meet our long-term commitments. During the year we saw the appointment of an experienced corporate trustee to manage the DB Pension Scheme and future deficit funding plans will be agreed based on the actuarial review. System and Data security risks remain high due to the persistent cybersecurity threats, many using artificial intelligence (AI). We are investing continually in our regional IT networks, our systems, and processes to support active deterrence, detection, and defence responses. This has enabled us to avail of cyber insurance in our largest market. In the year ahead, we are rolling out a series of senior leadership workshops to help assess our business resilience and to improve our crisis management processes. The Board has ultimate responsibility for determining the nature and extent of the risks that the business is willing to take. Putting people first “Acting as regional Innovation Lead has given me a deep sense of purpose and confidence. Choosing one standout project is tough - I’ve truly loved this role. Bringing ideas to life and adding value to the business is immensely fulfilling. It’s the perfect blend of my technical expertise and passion for innovation and sustainability.” Julia Outerbridge Senior Naval Architect | Acting Regional Innovation Lead “What stands out at BMT is the culture of encouragement. Employees are motivated to reach their potential, with senior colleagues eager to share their knowledge. This collaborative environment makes our team a pleasure to work with.” Mike Bell Senior Mechanical Engineer Emerging risks The international geopolitical situation is constantly evolving, and we monitor developments globally, working closely with our customers and third parties. Rapid technological change empowered by AI is now a reality and poses benefits and threats. We have invested in targeted digital and innovation programmes and are incorporating new technologies to create process efficiencies. The ongoing focus on sustainability, decarbonisation, and commitment to net zero targets provides opportunities and challenges. We continue to meet our reporting commitments and implement tools to help us track progress against targets. We are working to support our customers in the clean energy transition and to incorporate sustainability across all service areas, from maritime design through to critical coastal infrastructure and environmental management solutions. Risk appetite In 2024 we reviewed our risk appetite to ensure it continues to reflect our strategy. Our risk appetite remains balanced and supports taking measured risk in pursuit of our strategic objectives whilst being eager to challenge existing practices. We will accept more risk to accelerate pipeline growth and foster innovation in areas that we are confident will deliver value for us and for our customers. We seek to minimise legal and operational risks in areas such as compliance, cybersecurity, and safety, with a more cautious approach to management. Our risk appetite is supported by multiple levers that we use to manage risks and is monitored to assess our overall capacity to absorb shocks. ‘Our people are core to what we do and having the right skills, experience, and commitment is key to successful delivery.’ BMT Group Ltd | Review of performance 23-24 36 37
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