Principal risks

Description

By its very nature, our network infrastructure provides customers with open access to the internet and global voice networks. As such there is a risk from cyber threat and telephony fraud, as well as to the physical infrastructure.

Cyber-attacks are constantly evolving, and Gamma recognise they could be a target for both sophisticated targeted attackers as well as nuisance attackers, due to the downstream services provided to key sectors within the UK and European markets. Gamma holds various types of data and its network carries customer communications, which heightens the risk of a data related attacks.

Potential impact

A breach of security could have a significant impact on the Group's reputation and in some cases also impact its commercial position. Potential fines could also be enforced if the Company was found to be in breach of its obligations relating to various regulations.

With employees working remotely during the pandemic, the potential for a breach of security controls is heightened as employees will be working in an environment where data loss is difficult to monitor and security awareness is less acute compared to working in an office environment.

Mitigating actions

Gamma continues to adapt its governance structure to ensure best practice is followed in the identification and management of information and cyber security risks. This includes: increased frequency and broadened scope of both routine and bespoke penetration testing; continuous compliance checks; integrated security behaviours training, which is mandatory for all employees; dedicated security roles to track how cyber threats are evolving and are best detected; and Board visibility of the 'health' of the governance structure.

The business took swift action during the pandemic, invoking business continuity plans to migrate its workforce to remote working. As part of its ongoing information security planning, early in 2020 Gamma completed the roll-out of a new laptop estate with secure multi-factor authentication (MFA) designed to better secure access to its corporate network for remote workers. In addition, Gamma’s online security awareness training was adapted to focus on security threats relevant to the remote working environment and COVID-19.

The Company is represented in various Industry forums to ensure we are fully aware of new areas of risk, methods employed by malicious actors and best practice in the identification and mitigation of risk.

The Company's fraud management applications aim to identify unusual voice traffic patterns quickly and we have a 24/7 operational capability to then assess and mitigate the risk.

Gamma's core infrastructure and operating capability is certified under ISO 27001 for security.

Description

Communications services are critical to business customers. Maintaining an exceptionally high-quality overarching customer service experience is critical to Gamma's reputation, competitive position and ongoing financial success. This includes as examples: the ability for our channel partners and direct customers to easily place orders; to activate services on time; and to be able to access effective administrative or technical support quickly and easily, with all aspects increasingly taking advantage of the available digital platforms and user interfaces.

Potential impact

Delivering poor customer service has two potential impacts: firstly, on the Company's ability to sustain and grow revenues; and secondly, dealing with failure increases the costs of the support operation.

Mitigating actions

Gamma has a comprehensive service development strategy which aims to reduce the effort required by its customers to provision, support and consume its products and services. Gamma’s award-winning customer portal and training are constantly developed to ensure there is consistent alignment to the needs of its customers.

Customer feedback is proactively gathered from customer engagement sessions and surveys and subsequently acted upon. This coupled with digitally captured customer experience data provides the foundation of the service development strategy.

In 2020 Gamma has further developed its governance surrounding customer services and a monthly operational review, chaired by the CEO and attended by the management team, is kept informed of customer satisfaction and service performance trends which are used to identify any quality concerns and agree priority actions.

The impact of the Covid-19 pandemic has heightened this risk in 2020, and Gamma has utilised its business continuity planning framework to continue to maintain industry leading customer service, recording a Net Promoter Score (NPS) of +66 within it’s annual Channel Partner customer satisfaction survey.

Description

The business relies on a number of key suppliers to provide elements of its products and services. For example, access circuits purchased from other operators to connect to customer premises, and equipment from various hardware and software suppliers that facilitate the provision of Gamma's services.

Potential impact

Failure of one of these suppliers to perform may have an impact on our ability to deliver products and services within the UK and European markets.

The risk profile has increased year on year, due to the further expansion into Europe. Through this expansion, there is a high likelihood that the number of key suppliers will increase to grow within new geographies.

Mitigating actions

Where possible, the business avoids reliance upon a single supplier for a particular element of its service proposition and governance is in place to ensure key supplier contracts have appropriate clauses in place to assure their performance. Suppliers of important services are monitored carefully and are subject to regular operational reviews which include adherence to Gamma's information security requirements and broader service KPls. The Risk Committee reviews the most significant risks and the status of related mitigation projects quarterly.

Gamma’s Data Protection Committee manage the risk of data loss through 3rd party suppliers and apply controls proportionate to the risk level, with a targeted approach to the risk of personal data loss. Gamma utilise a risk management platform, which automatically issues annual questionnaires surrounding 3rd party data protection controls and identifies emerging risks for further analysis and audit.

Description

New entrants or existing service providers could extend or improve their product capability to thereby further increasing the competitive intensity faced by Gamma's products and services. The communications market is constantly evolving both in terms of the available product technologies and also in terms of how people prefer to purchase certain products, particularly in terms of the increasing use digital customer service technologies.

The impact of the Covid-19 pandemic has accelerated the business need for Unified Communications as a Service (UCaaS) products to support the surge in global demand for cloud communication and collaboration services as businesses transitioned to remote working. Gamma is well positioned to benefit from this market growth given the nature of its products, however the opportunity has also attracted new market entrants, and also driven existing service providers to pivot strategies in order to capitalise on this new demand.

Potential impact

Growing competition may dilute the addressable market and slow down the rate of growth. If the Company does not at least keep pace with the evolving market in terms of product and service development, then our plans for revenue growth may be negatively impacted.

Mitigating actions

Gamma aims to provide products and supporting services which are more attractive to its customers than those of its competitors. The planning, development and marketing of products and customer service that Gamma provides are closely aligned to the evolution of market demand and of relevant technologies. Gamma has ‘stress-tested’ its UCaaS strategy considering the market changes driven by the pandemic and has developed complementary strategies to continue to grow market share within its UK and European geographies. In addition, Gamma has continued to execute on its strategic technology and operational plans to remain competitive through rapid product development lifecycles and leading 'User Experience' (UX) software design.

Description

The UK's telecommunications sector does not have a ‘licence’ requirement; it operates under a General Authorisation regime whereby, in combination with relevant UK and European statute, the sector’s regulator outlines the required compliance which is presumed from telecommunications companies such as Gamma. The Company’s activities can be impacted by the decisions of relevant legislative, regulatory or judicial bodies both domestically and in other non-UK territories within which it operates.

Potential impact

The primary potential impact of new decisions would be changes to buy and sell prices for products and the processes Gamma uses for some transactions e.g. when customers switch providers. Should these activities be found to be in breach of the requirements of our General Authorisation, the primary impact would be the cost of negative publicity and any financial penalty levied.

This risk profile continues to evolve as we acquire businesses outside of the UK.

Mitigating actions

Gamma mitigates this risk by continuing to monitor likely legislative or regulatory changes within UK and non-UK territories, assessing their risk and potential impact, and by regularly engaging with regulators as appropriate.

Description

The business has grown rapidly over the last few years, and so far has experienced low staff turnover, and generally has been able to develop or recruit the number and quality of staff required to support our strategic development.

There is a risk to continued growth, product portfolio expansion, and entry into new markets, if the business cannot attract, develop, and retain people of the required skill and experience.

The Covid-19 pandemic has intensified the market demand for UCaaS skills and as this market continues to accelerate, it will become increasing important to differentiate our business and brand to continue to attract new talent to Gamma.

Potential impact

Loss of key individuals or an inability to recruit the required quantity or quality of people could have an impact on the future growth of the business or the quality of services provided. For instance in order for the business to achieve its strategic priorities, it is dependent upon recruiting and retaining highly skilled technical development and operational people with experience of modern technologies and design principles.

Mitigating actions

Gamma has a well-established team and a reputation for being a good employer. During 2020, in order to measure our employee satisfaction more frequently and in greater depth, the Company introduced a new employee survey platform and began quarterly employee engagement surveys across the business. Anonymous feedback is provided through this platform which has enabled managers to act more swiftly to reinforce positive trends and tackle any negative sentiment. In addition, a ‘Gamma Wellbeing Channel’ was introduced, which provides a place for employees to come together digitally, share experiences and promote wellbeing activities. The Company is also committed to the People Agenda, with focus on development and leadership programmes, succession planning as well as effective employee engagement initiatives. Furthermore, Gamma has a collaborative culture and a well-defined set of people-oriented values that help to make us an attractive employer.

Description

Acquisition of new businesses, particularly those in different countries introduces both financial and operational risk. These can arise, for instance, through incomplete due diligence, management distraction, failure of acquired businesses to deliver to their forecasts, misunderstandings due to differing languages and cultures.

Potential impact

These could include: failure to achieve expected financial performance; operational problems which could create reputational damage; distraction of management so opportunities are lost in the existing business.

Mitigating actions

In order to reduce the risks associated with acquisitions: pre-purchase, Gamma applies adequate specialist resource to due diligence, negotiation, and contractual preparation; post-purchase, adequate resource is applied to the integration and strategic direction of the acquired business and bringing it under the main governance control processes.

Description

Climate change has both immediate effects and progressive, long-term effects on the risk profile of businesses. Short-term effects include the increasing frequency of extreme weather events (wind/rain/flood); they may include step changes in costs (taxation on emissions or further investment into carbon reduction programmes): and will mean that certain sectors of industry find their business models difficult to sustain.

Potential impact

The impact of climate change risks on Gamma is assessed as low. Extreme weather risks are mitigated via existing resilience plans. Gamma’s energy costs are a small proportion of its costs and likely regulatory interventions are seen as manageable. The progressive effects on certain industry sectors are not expected to have a material negative effect given the diverse nature of Gamma’s customer base; in fact, overall the effort to fight climate change is believed to present an opportunity for Gamma since its products generally help customers avoid travel. Gamma considers that there is a significant risk of reputational damage if it does not continue to respond appropriately to reducing its contribution to global climate change.

Mitigating actions

Gamma’s business continuity planning is certified to the ISO22301 standard and the business can rapidly respond to climate related incidents. In the event of extreme weather Gamma has wellrehearsed procedures to protect all critical business operations. There are ‘hot standby’ operational sites, and our business can operate almost entirely remotely with secure, multi-factor authentication, access to our network. Gamma has also installed back-up generators at key network and customer support sites to mitigate the risk of power cuts.

As well as mitigating the risk from climate related impact, Gamma is also committed to reducing its contribution to global climate change by reducing its emissions and energy usage and has invested in carbon offset initiatives since 2006.