We believe that effective risk management is critical to the achievement of our strategic objectives and the long-term sustainable growth of our business.

What is our approach to risk management?

The Board has overall accountability for ensuring that risk is effectively managed across the Group and, on behalf of the Board, the Audit Committee reviews the effectiveness of the Group Risk Process.

Risks are reviewed by all business areas on a half-yearly basis and measured against a defined set of likelihood and impact criteria. This is captured in consistent reporting formats, enabling Group Risk to consolidate the risk information and summarise the key risks in the form of the Group Risk Profile. Our Executive Board discusses the Group Risk Profile ahead of it being submitted to the Group Board for final approval.

To ensure our risk process drives improvement across the business, the Executive Board monitors the ongoing status and progress of action plans against key risks on a quarterly basis. Risk remains an important consideration in all strategic decision-making at Board level, including debate on risk tolerance and appetite.

A risk-map

Our principal risks and uncertainties

As with any business, we face risks and uncertainties on a daily basis. It is the effective management of these that places us in a better position to be able to achieve our strategic objectives and to embrace opportunities as they arise.

To achieve a holistic view of the risks facing our business, both now and in the future, we consider those that are:

  • external to our business;
  • core to our day-to-day operation;
  • related to business change activity; and
  • those that could emerge in the future.

The ‘risk radar’ below maps our principal risks against these categories. This tool is also used to facilitate wider Executive and Board discussions on risk, including potential emerging risks as discussed under Risk interconnectivity.

A risk-radar

Below are details of our principal risks and the mitigating activities in place to address them. It is recognised that the Group is exposed to a number of risks, wider than those listed. However, a conscious effort has been made to disclose those of greatest importance to the business at this moment in time and those that have been the subject of debate at recent Board or Audit Committee meetings.

Description Mitigating Activities
Finance: We continue to focus on maintaining a strong financial position that supports improvements to our business

Economic outlook

Economic conditions worsen or do not improve, impacting our ability to deliver the plan

As consumers’ disposable incomes come under pressure from price inflation and government austerity measures, trading conditions continue to remain a challenge for our business.

  • Proactive management of costs
  • Regular review of customer feedback and marketplace positioning
  • Continued focus on value proposition in the context of a balanced product offer, including market leading innovation
  • Ongoing monitoring of pricing and promotional strategies
  • Regular commercial review of product performance
Brand and reputation: Our founding principles of Quality, Value, Service, Innovation and Trust continue to influence how we do business and our reputation for being one of the UK’s most trusted brands

GM product

Continued loss of engagement with our core customer

As we seek to enhance the M&S brand, it is important that we address our core customers’ specific needs in an increasingly competitive market where economic uncertainty continues to be an influencing factor.

  • New senior management team appointed with clear focus on quality and style
  • Prioritisation of core customer in both General Merchandise and Marketing objectives
  • Regular review of customer reaction to product and in store experience through focus groups and in-house Customer Insight Unit presentations
  • Ongoing product and store improvements addressing specific customer feedback
  • Targeted marketing and promotional activity using customer loyalty data

Food safety and integrity

A food safety or integrity related incident occurs or is not effectively managed

As a leading retailer of fine quality fresh food, it is of paramount importance that we manage the safety and integrity of our products and supply chain, especially in light of the business’ greater operational complexity and the heightened risk of fraudulent behaviour in the supply chain.

  • Dedicated team responsible for ensuring that all products are safe for consumption through rigorous controls and processes
  • Continuous focus on quality
  • Proactive horizon scanning including focus on fraud and adulteration
  • Established supplier and depot auditing programme
People and change: Our people are fundamental to the long term success and growth of this business

Our people

Our organisational culture and structure limit our ability to adapt to market changes with pace

As the business strives to become a leading international, multi-channel retailer, it is essential that our organisational set-up allows us to respond to market changes with pace.

  • External hires recruited into a number of senior roles bringing an alternative perspective
  • Robust employee engagement process for effective communication
  • Alignment of development programmes with business strategy

Programme and workstream management

Benefits from our major business programmes and workstreams are not realised

We continue to undertake a number of major strategic programmes to underpin the achievement of our plan; the delivery of forecasted benefits is critical to this.

  • Strategic Programme Office centrally governs the Group’s initiatives providing regular status and benefits realisation updates to the Executive Board
  • Proactive management of programme portfolio and associated benefits in the context of current market conditions and the Group’s three year plan
  • Programme governance structures in place for all major programmes, supported by robust project management discipline
  • Proactive identification and management of major cross programme interdependencies

Distribution centre restructure

We fail to effectively deliver our new national e-commerce distribution centre

Our new national distribution centre will also service all customer orders placed through Shop Your Way. The implementation of this distribution centre relies on the opening of a new facility and new business processes and systems.

  • Robust programme governance in place with clear identification of interdependencies with other Group initiatives
  • Phased approach to implementation
  • Ongoing review of trajectory for achievement of agreed operational and financial objectives
  • Ongoing review of contingency requirement during facility transition
  • Engagement with external experts (as appropriate) to ensure successful delivery of the in-house operation
Selling channels: We have ambitious plans for our UK, International and Multi-channel businesses as part of our commitment to becoming an international, multi-channel retailer


A new multi-channel platform with flexibility to support future growth is not delivered by the time our contract with Amazon expires

To achieve our target to become a leading multi-channel retailer and to make our brand more accessible, we are investing in a new online platform that will provide both an enhanced shopping experience and help to accelerate growth.

  • Robust programme governance in place with clear identification of interdependencies with other Group initiatives
  • Phased approach to implementation
  • Agreed quality assurance plan for programme delivery
  • Close working with Amazon to ensure the quality of the existing online offer is maintained during new platform delivery


Our plan to grow our international business is limited by performance in legacy markets, the start up profitability of new markets or substandard infrastructure

To increase our international presence and build a leadership position in priority markets it is crucial that we maximise our performance in both legacy and new markets, supported by robust systems and supply chain capability.

  • Frequent monitoring of performance, including individual country reviews
  • Particular focus on like for like performance and poor performing stores
  • Property Board approval of new store openings and monitoring of returns on investment, plus creation of key roles to facilitate delivery of property pipeline
  • Representation of International in key Group initiatives
Day-to-day operation: We are a customer-centric business and strive to deliver an efficient and effective operation

GM stock management

Ineffective stock management control impacts either gross margin delivery or product availability

Effective stock management is integral to ensuring that we provide good availability to our customers, whilst minimising the impact of markdowns on profitability.

  • Stock, Sales & Intake tool used consistently across GM to plan and manage stock levels
  • Regular commercial reviews to monitor stock levels and improve overall stock control
  • Tight control of promotional activity
  • UK stock ledger now live and the implementation of supporting Business Insight reporting underway
  • Established inventory control team to ensure stock data integrity

IT change

Unforeseen impact of IT changes to new and existing systems disrupts business operations

As we undertake a number of significant change programmes, the rate and scale of IT change is increasing, with potential to significantly impact our complex and interdependent systems.

  • Established Change Approval Board process
  • Clear decision making process for system changes, including the adoption of change freezes during critical trading periods
  • Proactive management of cross programme dependencies including ‘release management’ to group system changes together
  • Robust Disaster Recovery plans in place for critical business applications

The Group Risk Profile reflects the most important risks facing the business at this point in time; these risks receive specific attention by the Board to ensure that sufficient mitigating activity is in place to reduce net risk to an acceptable level. The Group Risk Profile will evolve as these mitigating activities succeed in reducing the residual risk over time, or new risks emerge. As such, we have removed a number of risks from our Group Risk Profile since the prior year:

  • Last year we included Business continuity on the Group Risk Profile in response to the heightened level of risk driven by the UK’s summer 2012 events. With the risk now returning to a normal level it has been removed, recognising the strength of our controls in this area
  • Financial position, Corporate reputation, New store format, Key supplier failure and IT security have also been removed in recognition of the actions taken to reduce the net risk position

The above risks remain important and they continue to be monitored as part of ‘business as usual’ activities; however, we consider that they do not represent key risks to our business at this time and they have therefore been removed from the Group Risk Profile.

The risks listed do not comprise all those associated with Marks & Spencer and are not set out in any order of priority. Additional risks and uncertainties not presently known to management, or currently deemed to be less material, may also have an adverse effect on the business.

Further information on the financial risks we face and how they are managed is provided in the Financial Statements (PDF 0.5MB).

Risk interconnectivity

We continue to recognise the significant interdependency between our key risks, which is in part a product of our heavily interconnected business environment (both in terms of systems and processes). The following diagrams are based on our current Group Risk Profile. Both are designed to highlight how changes to one risk could impact on those connected to it, and therefore on the profile as a whole. We have incorporated a number of potential emerging risks which do not feature on our Group Risk Profile at this point in time, but could influence our business in the longer term, illustrating how emerging risk is considered by the Board.

Risk and the role of Internal Audit

Internal Audit & Risk comprises both the Group Risk function and Internal Audit. Whilst Group Risk facilitates and manages the risk process that is ultimately owned by the Group Board, Internal Audit are accountable to the Audit Committee. Audit projects are often closely aligned to the Group Risk Profile due to the risk-based approach used to prioritise audit work. The following examples illustrate how Internal Audit work supports Group Risk whilst driving improvements to our control environment and adding value in core business areas.

Management actions

Management actions from our audits are tracked to completion and the status of these actions is reported to the Audit Committee to ensure that the risks identified are appropriately addressed. This will, in turn, further mitigate the risks included in our Group Risk Profile.