Financial/administrative risks are linked to developments in financial markets and financial & administrative management.

We recognise the following 11 financial/administrative risks:
F-1 financing risk (including being unable to comply with bank agreements)
F-2 interest risk
F-3 currency risk
F-4 debtor risk
F-5 administrative organisation: integrity, availability, monitoring of automatic data processing and storage
F-6 financial control
F-7 cash flow risk
F-8 potential excessive reimbursement of expenses (fiscal)
F-9 accounting fraud
F-10 risk related to activities abroad: different laws & regulations than in the Netherlands
F-11 tax plan for 2019

The first 10 financial/administrative risks are unchanged since 2016, while the last one was added in 2018.

Operational risks are linked directly with operational activities.

Nineteen operational risks are monitored by the RAI:
O-1 safety while working in the halls
O-2 construction risks: risks not covered by licenses that can occur when placing temporary installations and structures
O-3 major health risks (legionella)
O-4 hazardous substances
O-5 hygiene and food
O-6 product liability related to RAI services
O-7 crowd control (e.g., in case of fire)
O-8 failure of installations essential to an event (cooling, heating, power etc.)
O-9 failure of in-house operational ICT systems (administration, operations)
O-10 failure of event network for exhibitors
O-11 growth in third-party demands on IT infrastructure and public services at RAI Amsterdam that is faster than our ability to upgrade/expand
O-12 use of public infrastructure by organisers, exhibitors and/or visitors that differs from expectations, resulting in major disruptions
O-13 privacy violations due to misuse of data
O-14 data theft by hackers
O-15 presence of asbestos in old building
O-16 developments in the market and demands from the organisation which outpace the IT infrastructure
O-17 lower profits from connectivity services
O-18 damage to reputation (going viral via social media)
O-19 inadequate ability to recruit sufficient numbers of quality personnel and flexible workers due to scarcity in the labour market

The risk ‘nationwide strike’ was removed and the risk O-19 added in 2018.

The combination of the current risk and current consequences determines whether the current risk level is seen as low, medium or high. The evaluation explicitly takes into account the prevailing monitoring procedures and measures/actions taken to mitigate the relevant risk. The determination of risk and consequence is indicated in the matrix table. The letters in the matrix indicate the type of risk, with S representing strategic risks, O operational risks, and F financial/administrative risks. The associated numbers refer to the specific risks as described above. The colours represent the following risk levels: low (blue), medium (grey) and high (red).

Given the desired financial resilience, the RAI has set its maximum tolerance for financial risk at €10 million. If an impact of this magnitude should manifest itself, RAI Amsterdam will have sufficient buffers to manage the consequences.

The risk management approach has stayed the same in 2018 as in 2017.

At the end of 2018, RAI Amsterdam has made a start on further strengthening its risk and compliance management. The company wishes to set up a cyclical framework for this purpose based on the ISO 31000 and ISO 19600 principles and guidelines for risk and compliance management. This will enable the RAI to improve the quality of its processes and make them even more goal-oriented while being a learning organisation. A risk and compliance position has been created in order to shape this process.

The matrix shows that nine risks – seven strategic, one financial and one operational – are considered high. They are:
S-4 exploitation risk: the risk that a major third-party event is cancelled
S-5 security: the risk of terrorism
S-7 [risk not made public for competition reasons]
S-10 market development: exhibitors use other channels to reach their target groups in the future
S-11 [risk not made public for competition reasons]
S-12 licence to operate: the RAI cannot structurally balance social costs and benefits
S-13 [risk not made public for competition reasons]
F-11 tax plan for 2019
O-19 inadequate ability to recruit sufficient numbers of quality personnel and flexible workers due to scarcity in the labour market

S-4 exploitation risk: the risk that a major third-party event is cancelled
To prevent that a large exhibition or conference organised by a third party is cancelled (risk: very high, and in fact has occurred; consequences: severe) the relation management of the A accounts has been entrusted to the Executive Board. Where possible, long-term contracts are implemented. To minimise the consequences of the potential loss of a major third-party title on the results of RAI Amsterdam, priority in terms of both time and funds is given to attracting new exhibitions and conferences for the future.

S-5 security: the risk of terrorism
RAI Amsterdam has a Safety & Security Board that monitors processes and, where necessary, adapts measures related to protection against calamities.

S-10 market development: exhibitors use other channels to reach their target groups in the future
This risk is being mitigated by intensifying innovation and product development. The RAI aims both to integrate new channels and connect them to exhibition titles, and to develop them autonomously so as to reach communities and inspire people.

S-12 licence to operate: the RAI cannot structurally balance social costs and benefits
This risk is being mitigated by focusing on the balancing of social costs and benefits by making it one of the two core principles in the new strategy covering the period until and including 2022.

F-11 tax plan for 2019
The RAI has an active lobbying policy and deploys mitigating measures where possible.

O-19 inadequate ability to recruit sufficient numbers of quality personnel and flexible workers due to scarcity in the labour market
Strategic personnel planning will provide more insight. The following measures are being assessed: policy development, new partnerships, department reinforcement and/or changes to how work is organised.

There is no risk linked to share prices as RAI Holding BV does not hold any shares listed on the stock exchange.

Liquidity risk refers to the danger of having insufficient funds to cover direct obligations. Active monitoring of cash flow and setting up of a multi-year forecast which assesses the cash flow and predicts available liquidity limits the risk here. RAI Holding BV has formulated measures which will lead to an immediate lowering of expenditures should the liquidity risk increase.

The current financing agreement will last until 2020. The uncertainty about the possibilities to attract financing is being mitigated through the maintaining of an active relationship with providers of loan capital, a proven track record of maintaining the agreed ratios, and keeping to a clear strategy. The current financing agreement, which runs up until and including 2020, will be followed up in good time before it expires.

Risk linked to financial instruments is described in the financial statement in the section ‘notes on the consolidated annual account'.

RAI Amsterdam has a tender board which assesses all purchase orders above a given threshold amount for compliance with regulations and, where necessary or desirable, formulates calls for tender.

RAI Amsterdam holds various event-related permits and certificates. A unique cooperation with the City of Amsterdam has meant that RAI Amsterdam is the first private company in the Netherlands to be given the authority to regulate and enforce event-related permits in a number of fields. To ensure compliance with legislation, RAI Amsterdam has an internal permit office which is charged with applying the policy and issuing and enforcing permits.

To ensure compliance with tax laws, RAI Amsterdam makes use of advisors – some of whom are affiliated with the accountant and some who are not – to assess RAI Amsterdam’s processing of tax legislation. The two most important types of tax for RAI Amsterdam are VAT and corporate tax.