Boskalis Annual Report 2018

report of the board of management ANNUAL REPORT 2018 – BOSKALIS 54 RISK

MANAGEMENT

The proper identifcation, assessment and management of risks and opportunities – notably with respect to tendering, preparation and execution of projects – is an integral part of our management approach. Our tolerance or appetite for risks is documented in the Group’s guidelines, policies, procedures and instructions. Examples include the General Code of Business Conduct and the Supplier Code of Conduct, safety and quality policies and procedures, vendor selection criteria, project risk classifcation system, contracting guidelines, authorization limits, treasury policies, management planning and control systems, fnancial control framework, crisis management plans, information security and access management policies. During the year under review we have further embedded our group-wide quality management system which we refer to as the Boskalis Way of Working (WoW). In designing this system we observed the principles and guidelines of the ISO 31000 standard for risk management. The overriding objective of our WoW-system is to give our staff the best possible support in achieving operational excellence when contracting and executing projects. Operational excellence in this context means achieving compliance with the internal and external control requirements imposed on our primary project process whilst minimizing failure costs. For all business units, external certifcation bodies have asserted that the implementation of WoW complies with the most recent applicable international (ISO) standards. Below sets out an overview of what we currently consider to be the most important strategic, operational, compliance, fnancial (reporting) and other risks we face in pursuing our business objectives. This overview is not exhaustive and risks have not been ranked in order of importance. There may be other risks which we currently do not consider to be signifcant but which at a later stage may manifest themselves as such. Where possible, we have indicated the specifc measures in place to help mitigate these risks. STRATEGIC AND MARKET RISKS The Boskalis markets are heterogeneous and often develop disparately. Our main (end) customer groups are national, regional and local governments, or associated institutions such as port authorities, private port operators and major international oil and gas companies and wind energy companies (operators as well as contractors). Other customer types are (container) shipping companies, ship and offshore construction yards, insurance companies, mining companies and (infrastructure and real estate) project developers. Notwithstanding the positive long-term growth prospects for our markets they can be – certainly in the short and medium term – negatively impacted by factors outside our control. Such factors include for example general or regional geopolitical developments, such as energy policies, political unrest, piracy, government-imposed trade barriers and volatility in the energy and commodities markets. Boskalis aims to respond as effectively as possible to both positive and negative developments in individual markets, through a global spread of its activities, an extensive and versatile fleet operating out of various international locations, and strong positions in its core markets. Moreover, our activities are largely focused on the development, construction, installation and maintenance of infrastructure, which means that longer-term developments will generally outweigh short-term economic fluctuations.

Contracts are not included in our order book until agreement has been reached with the client. Although experience shows that once agreement has been reached, cancellations,