The Board retains ultimate responsibility for the Group’s risk management framework. A process is in place to formally review principal risks across the Group and to ensure that the Board receives regular assurance as to how the risks are being managed.

Assessing risk and putting steps in place to respond appropriately is essential both to protect our Group and to make correct business decisions affecting our future. We continue to balance risk with the opportunities the Group identifies, and an acceptance of a certain level of risk is essential to allow the Group to advance towards its strategic aims.

The management of these risks is an inherent part of our strategy and the ongoing assurance provided to the Board delivers valuable insight into the progress against these aims.

Prioritising risks

Risk KeyWe have set out the key risks facing the Group as approved by the Board. We also provide a view on the likelihood of these risks crystallising in the coming year and the potential impacts, along with an indicator of the change in risk compared to the prior year assessment. The narrative outlines how the Group is placed to deal with risks as they impact the business.

Area of risk

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Regulatory compliance and change

Regulatory compliance


What's the issue?

We have combined risks relating to changing regulatory environments and our ongoing compliance requirements. Failure to meet standards required by regulatory bodies may result in significant business interruption, fines or reputational damage.

Holding licences in key markets, such as with the Nevada Gaming Commission, is an essential part of our growth strategy and therefore the risk of breaching local licensing regulations is clear and must be managed and monitored. This drives a need to continually update processes and controls to ensure compliance and to review the ongoing changes to our business across the Group to assess the impact on our licensing position.

What are we doing to address the issue?

We remain wholly confident that investment in our compliance and assurance functions allows us to identify, understand and address changing regulatory requirements in an efficient and effective manner. We actively engage with the UK Government and regulatory bodies to discuss the measures by which we fulfil our obligations under the licensing objectives in the UK.

In the UK, in addition to our ongoing support and continued adherence to the voluntary ABB Code, William Hill remains a committed member of the Senet Group, which aims to promote responsible gambling standards and to hold its members to account.

In addition to our core commitment to support the British Gambling Commission’s core licensing objectives, the Group remains committed to upholding the standards required in all of our licensed territories as they continue to evolve. We maintain dialogue with regulators and other key stakeholders in our licensed territories internationally, continually monitor the changing legal landscape and adapt our strategy on a country-by-country basis to changes in regulation. A high proportion of Online’s revenues are derived from licensed territories, which mitigates risks associated with operating on a non-locally licensed basis.

We have well-resourced in-house compliance functions and have compliance officers in all of our strategic business units who are a core part of the local management teams, ensuring compliance has a voice at the top table in each location. Compliance processes and controls across the Group are well established and the compliance functions operate independently of operational management both to support management’s compliance obligations and to provide ongoing assurance over the adherence to local requirements. A bi-monthly Group Compliance Committee provides all compliance officers with direct access to the Group CEO and ensures compliance issues are shared across the Group to allow for the identification of trends and common issues.

The Group Risk and Audit function also considers regulatory compliance as a core part of audit delivery, reporting directly to the Audit and Risk Management Committee, as an independent third line of defence.

Execution of IT strategy

Data technology and technology risk


What's the issue?

The demand for stability and availability of our core platforms has never been higher, both as a global business sharing elements of our trading platforms across differing time zones, and increasingly around the clock with significant peaks in activity driven by key sporting events.

Technology is also key to being able to differentiate within our markets, hence our technology must enable a high speed to market and deliver a great user experience, whilst still meeting stability and availability demands.

Failure to execute the IT strategy could cause other key risks to crystallise, as well as having a direct impact on customers

What are we doing to address the issue?

Our strategy over the last 18 months has seen investment in core technology platforms, reducing reliance on third parties as we take direct ownership of our own platforms and systems, including the launch of our Trafalgar platform in the Online business and the introduction of our Riga interface which allows us to utilise content from multiple suppliers within our core Vegas platform.

Ongoing investment will continue to focus on reducing this risk further.

Where key dependencies exist we have robust contracts in place and are working with suppliers to ensure those agreements meet our changing business needs.

Investment in IT remains a core pillar of our strategy, and the recent appointment of a new Chief Information Officer (CIO) reflects our commitment to continue strengthening our IT capabilities. Where appropriate good practice in technology is shared across the Group.

Cyber crime and security

UK and overseas regulation

What's the issue?

Technology-focused businesses continue to see increased threats of unauthorised access to data or systems, misappropriation of funds or significant down-time from cyber crime or malicious activities. Increasingly sophisticated protection techniques and growing investment in technology and people are required to prevent or mitigate significant financial, operational and reputational damage associated with such breaches. The 24/7 nature of the sports betting and online gaming industries, and the increasing digital footprint of our global operations, mean that this risk is a material and increasing threat facing the Group.

What are we doing to address the issue?

Our technology security arrangements have proven sufficient to prevent material damage to our business up to this point in time. We have not suffered any material loss of functionality, data security breaches or financial loss as a result of the exploitation of security vulnerabilities in the period. However, the continually evolving and growing threat ensures that we are not complacent and we continue to review and enhance our security offering internally and through the use of specialist third parties.

We undertake regular external security scans and have controls in place to mitigate the effects of denial of service attacks against our systems. We work with a number of specialist IT partners to ensure that our security arrangements and systems are well structured, sufficient for our current needs and up-to-date with the latest IT security developments and to learn from any incidents experienced across the Group.

Competitive landscape


UK and overseas taxation and duties

What's the issue?

The last year has seen a number of high profile changes to the competitive landscape, in particular the completion of mergers within the UK bookmaking industry, as well as other intended mergers yet to complete. Longer term these changes are likely to alter the dynamics of the industry and will no doubt result in increased competition to attract and retain customers, which may impact margins and put pressure on market share.

What are we doing to address the issue?

Whilst the wider market remains distracted by the mechanics of internal changes, William Hill remains focused on the development of its leading market position and well placed to take advantage of new opportunities as they arise.

We remain committed to the presence of William Hill as a leading brand in our core markets and to the increasing internationalisation of our brand and business, and we understand how the changing competitive landscape will affect our business in these markets. We have consistently demonstrated our ability to differentiate our brand in crowded markets and to support this in the last year alone we have: launched Project Trafalgar in our Online business; continued to drive forward our Omni-channel strategy in our UK business, drawing on the complementary and unique strengths of our Retail and Online offering to enhance our customer experience; actively sought to compete in the market through the launch of mobile apps in Australia and the US, including the in-play service; consolidated our multi-brand offerings into one William Hill brand in Australia; invested in an online lottery business to provide access to new product streams; and successfully launched the WH Labs accelerator programme, demonstrating our commitment to innovation.

These developments are illustrations of our ability to deliver effectively to the market and to differentiate our Group in crowded local markets under one Group brand.


Key supplier relationships

What's the issue?

To address the range of challenges a business as complex as ours faces it is essential we maintain and develop a focused leadership team and have access to a number of highly-skilled specialists across the Group.

What are we doing to address the issue?

During the period there have been a series of managed transitions in the core management team, allowing our CEO to establish a team aligned to the strategic aims of the business and with the core skills required to deliver the vision. Continuing investment in recruiting and integrating key senior hires to supplement the existing core management team underpins our commitment to the growth strategy.

Overall the Group provides competitive salary and benefits packages, including short-term bonuses and long-term share-based incentives, and regularly reviews these for competitiveness. Employees are encouraged to become owners of the business through annual Save-As-You-Earn programmes. The Board has visibility of key leadership remuneration arrangements through the Remuneration Committee.

The Group continues to utilise robust appraisal and goal-setting processes and performs annual talent reviews with the senior management team. The Group regularly reviews the levels of employee engagement through an annual employee survey and implements specific action plans to address areas of improvement

Fiscal change


What's the issue?

The Group remains exposed to the impact of taxation changes in all key markets, which cannot be directly passed on to our customers, and therefore impacts the bottom line. Both the Point of Consumption Tax and Machine Games Duty changes impacted in 2015, but are built into budgets and forecasts, and at the prior year-end the timing of the general election drove uncertainty as to the UK tax position. Therefore, the risk of further tax changes affecting profitability is reduced compared to the last risk assessment.

What are we doing to mitigate the issue?

There remains a requirement to ensure that cost savings and efficiencies throughout the Group help mitigate increasing costs outside the Group’s control. The Group actively engages in relevant government consultations. Our continued international expansion makes the risk of taxation change more likely, if not certain, to some extent across our footprint. However, it actively reduces the reliance on any individual country and will lessen the impact of changes imposed by any one government.

Business continuity management and disaster recovery

What's the issue?

Over recent years the Group has had to address a number of potentially significant business interruptions, often with external causes and the potential to cause major interruption to our operations. Failure to adequately respond to business interruptions may result in unnecessary loss of business or adversely impact customers’ experience. In all cases we have realised the benefit of our ongoing investment in preparations for business interruption and the resulting impact from an operational and technology perspective has been successfully managed.

What are we doing to address the issue?

The Group now has access to Business Continuity sites in our core UK locations, multiple sites or bespoke Business Continuity facilities in key overseas locations or the ability to rely on tested and proven flexible ways of working in other locations. Further back-up IT systems have been put in place for a number of business critical systems, generally in different geographic locations from the main system. However, this is not intended to be a full duplication of the operational systems as this would not be cost effective, so some day-to-day activities could be curtailed in the short term should an incident occur.

We will also continue to test and rehearse our people, technology and building services infrastructure to ensure that business continuity capability and readiness is embedded in the culture of the business.