Page 30 - RFU Annual Report 2017

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Strategic Report

Major Risks and Uncertainties

Risk management Player welfare is fundamental and it is an existing Sky contract through to 2020
at the heart of the training delivered to are testament to the current strength
Active risk management is essential for coaches, referees and medics, at all levels of these assets. Regular reviews of
the RFU to operate successfully. The of the game. Rugby union is a sport which commercial models are conducted to
Union manages both the opportunities involves physical contact, and any sport ensure the mitigation of the risk of these
created by the Union’s Strategic Plan or physical activity has inherent risk. assets becoming devalued.
and the sporting environment, and also
risks which exist. The RFU monitors and The RFU is committed to protecting Financial risks
minimises in a structured and proactive player welfare and has implemented
manner key risks which could have a expert researched player safety and Borrowing for major capital projects
significant impact on performance both wellbeing programmes across the game,
on and off the field. as well as injury and illness prevention In March 2016 the RFU set up a five-year
initiatives. The RFU has taken the lead revolving credit facility with RBS to help
Any new and existing risks are reviewed on ongoing research into the immediate fund both the building of the new East
on a quarterly basis by the Board, while treatment of injuries and a thorough Stand Development and to support the
the wider Executive Team reviews both research into concussion. rollout of the RugbyTurf and RugbyShare
strategic and operational risks on a AGP programmes.
monthly basis. Controls and action plans In the thankfully rare incidents of
to mitigate risks are also monitored catastrophic injury, the RFU Injured The terms of borrowing from the credit
on an ongoing basis by the RFU Audit Players Foundation provides immediate facility (see note 22) include certain
Committee. and lifetime support to players and financial covenants which are expected to
their families with the aim of getting be achieved based on the Group’s current
Grassroots participation and the injured player to lead as full and forecasts for the next five years.
player welfare independent a life as possible.
Interest rate rise
Growing the community game at all Integrity as a governing body
levels, both men’s and women’s and Interest rate rises remain a risk for the
across all age grades, is critical for the Strong governance procedures within Group in relation to the £50m term
RFU’s ongoing success as a governing the game are crucial to maintaining the loan, £25m revolving credit facility and
body, from a commercial perspective and integrity of the sport in England, as well £25m overdraft facility, committed post
in order to develop the elite players of the as the RFU’s reputation as the governing year end with RBS. Any likely increase
future. body and the continuance of sponsors’ over the short term is expected to be
and other partners’ involvement. relatively small, and significant levels of
It is essential in terms of reputation, discretionary spend across the Group
funding from Sport England and the Proposed changes to RFU governance give the flexibility to cope with any such
attractiveness of the RFU’s commercial as required under the recent Sport rise over the duration of the facility being
assets. Lifestyle changes and the British England Governance Code were in place.
weather threaten the development and approved at a Special General Meeting
availability of the game at grassroots on 24 November 2017. These proposed Foreign exchange fluctuations
level. Consequently, the RFU are changes improve the Union’s governance,
addressing this risk by investing in providing transparency over the roles and The RFU receives some of its income in
Artificial Grass Pitches (AGPs), which responsibilities of each element of our Euros from the Six Nations sponsorship
supplement natural turf pitches and decision making process, and ensuring agreements, and the recent devaluation of
provide playing, training and education that the right decisions are made by the sterling following the EU referendum has
facilities with a consistent surface right people. benefitted the RFU. The adverse impact
throughout the year on which to play the of currency fluctuations is reduced by the
traditional 15-a-side offering, through to Disciplinary, safeguarding and anti- use of participating forward contracts,
newer and more accessible versions of the doping frameworks are always under purchased in line with the Group hedging
game, such as touch rugby and sevens. review to ensure these are robust and policy.
relevant at all times.
Increasing competition from other Matches at Twickenham
forms of leisure activity and a new Strong and sustainable
generation of consumers who have commercial assets Twickenham Stadium events form
their own expectations and are driven a significant part of the Group’s
by technology brings potential risk to The RFU’s ability to invest in rugby at all revenues and the RFU works closely
our participation levels and commercial levels relies on driving sustained value with all relevant authorities, including
revenue. from all commercial assets. Without a government and the local council, to
strong brand, strong performances of manage any potential risk, and also has
To appeal to this new player and fan England teams, and optimising the use of relevant insurance contracts in place.
base and leverage technology to this Twickenham Stadium, rugby investment
end, strategic priorities for 2017 – 2021 could be severely reduced. Customer or supplier bankruptcy
are designed to respond to the changing
sports landscape and keep rugby relevant The Group concentrates on securing The bankruptcy of a large customer or
in today’s society by engaging and longer term commercial contracts with supplier could cause significant revenue
inspiring new audiences, and providing sponsors and broadcasters. or operational and project delivery issues.
more opportunities for people to get These issues are mitigated by conducting
involved in rugby. The renewal of main shirt sponsor O2 for due diligence reviews during the
a further four years through to 2021 and negotiation and procurement processes
and by reviewing on an on-going basis.

Annual Report 2017