Risk exposure
Exposure to electromagnetic
fields
fields
Telecommunications
services
services
Revenues and profits
| Risk area | Orange Polska’s failure to successfully implement its strategy could lead to a loss of market share and/or shrinking margins |
Risk exposure 
|
| Main business objective / Strategy reference | Unmatched data connectivity for households and businesses | |
| Key risks, issues or areas of uncertainty |
|
|
| Potential
impact |
The main markets in which Orange Polska operates are
mature or even saturated. It therefore faces extremely tough
competition, which initially was mainly on price, but presently
focuses on the quality of products and customer care.
The rapid growth in broadband use (both fixed and mobile) and emergence of new technologies allow global players in the internet sector to establish a direct link with customers of telecom operators, thus depriving the latter, including Orange Polska, of a portion of their revenues and margins. If this phenomenon continues or intensifies, it could seriously impair the financial position and outlook of operators. Orange Polska’s failure to successfully implement its strategy could lead to a loss of market share and/or shrinking margins. The same could occur in the event of consolidation of other players in one of the markets where it operates. Moreover, with growing complexity of technologies and networks and accelerated implementation of new applications and services, particularly related to interconnection and customer relationship management, new types of fraud which are more difficult to detect or combat could also emerge. This may result in a loss of revenues. |
|
| Management approach and mitigation measures | In response, Orange Polska has chosen to make significant investments in fibre, pursue a convergence strategy and continue with transformation and efficiency gains. It is also committed to developing new business activities, such as electricity supply. | |
| An indication of each category’s current exposure relative to the previous year is shown by the arrow in the risk exposure column. |
|
Revenues
and profits
and profits
Information
security
security
Telecommunications
services
services
| Risk area | Increase in the number and duration of service interruptions |
Risk exposure
|
| Main business objective / Strategy reference |
Effortless and friendly
customer experience
Unmatched data connectivity for household and business |
|
| Key risks, issues or areas of uncertainty |
|
|
| Potential
impact |
Service disruption or interruption may occur following (i) cyberattacks (on the IT&N infrastructure), (ii) outages (of hardware or software), (iii) human errors, acts of terrorism or sabotage of critical hardware or software, (iv) failure of a critical supplier, or if the network in question does not have sufficient capacity to meet the growing usage needs, or (v) during the implementation of new applications or software. The impact of such incidents could seriously damage Orange Polska’s reputation and result in revenue erosion, affecting its profits and market position. | |
| Management approach and mitigation measures | This risk is mitigated by proper network and IT systems development planning, investments in the development of disaster recovery solutions insurance schemes (covering cyber and terrorism risks) as well as implementation of business continuity and crisis management plans. Orange Polska has become the first telecom operator in Poland to obtain the ISO 22301:2012 Certificate for its Business Continuity Management System in the scope of provision of telecommunication, ICT and cybersecurity services. | |
| An indication of each category’s current exposure relative to the previous year is shown by the arrow in the risk exposure column. |
|
Telecommunications
services
services
Financial risk
Information
security
security
| Risk area | Breach of security of information, including personal data |
Risk exposure 
|
| Main business objective / Strategy reference | Acting in effective and responsible
manner
Effortless and friendly customer experience |
|
| Key risks, issues or areas of uncertainty |
|
|
| Potential
impact |
Orange Polska’s activities may trigger the loss, disclosure,
unauthorised communication to the general public or third
parties or inappropriate modification of the data of its customers.
Such losses could arise from (i) rapid implementation of new
services or new applications, for example those relating to
billing and customer relationship management, (ii) launch of
new initiatives, especially in the field of Internet of Things (IoT),
(iii) malicious acts (including cyber-attacks), particularly aimed
at theft of personal data, or (iv) potential negligence within
Orange Polska or its external partners.
For infringement of GDPR protection rules, administrative fines of up to 4% of the annual global turnover may be imposed. Such incidents could have a considerable impact on the Group’s reputation and a heavy impact on its liability, potentially including criminal liability, and hence have an adverse impact on Orange Polska’s future financial performance. |
|
| Management approach and mitigation measures | Orange Polska holds an Information Security Management
System certificate of compliance in line with ISO/IEC 27001:2013,
for the scope of services of ICT, hosting, collocation, cloud
computing, cybersecurity and personal data processing in
cloud computing.
In addition, Orange Polska holds a certificate of compliance with ISO/IEC 27018:2014 Code of practice for protection of personally identifiable information (PII) in public clouds acting as PII processors; it covers personal data processing services in cloud computing via UCaaS (Unified Communication as a Service), ICS (Integrated Computing Standard), ICM (Integrated Computing Managed) and smart CCaaS (smart Contact Center as a Service) cloud computing. Furthermore, the Company holds and maintains FIRST and Trusted Introducer certificates for CERT Orange Polska. |
|
| An indication of each category’s current exposure relative to the previous year is shown by the arrow in the risk exposure column. |
|
Information
security
security
Corporate governance
and regulatory, tax and
legal environment
and regulatory, tax and
legal environment
Financial risk
| Risk area | Risks related to financial markets |
Risk exposure
|
| Main business objective / Strategy reference | Acting in effective and responsible manner | |
| Key risks, issues or areas of uncertainty |
|
|
| Potential
impact |
The Polish Central Bank’s policy did not change in 2018 and
interest rates remained stable at a historic low. The market
expects that the The Monetary Policy Council will keep interest
rates unchanged in 2019, while taking steps to prepare the
market for increases in 2020.
Foreign exchange rate fluctuations affect Orange Polska’s liabilities denominated in foreign currencies and settlements with foreign operators. |
|
| Management approach and mitigation measures | A potential increase in interest rates should not have any major
influence on Orange Polska’s debt service costs, owing to
a high hedging ratio.
Potential depreciation of the Polish zloty should not have any major influence on Orange Polska’s liabilities denominated in foreign currencies or settlements with foreign operators, owing to a high hedging ratio. |
|
| An indication of each category’s current exposure relative to the previous year is shown by the arrow in the risk exposure column. |
|
Financial risk
Exposure to
electromagnetic
fields
electromagnetic
fields
Corporate governance
and regulatory, tax and
legal environment
and regulatory, tax and
legal environment
| Risk area | Regulatory obligations resulting from legislation changes and administrative decision |
Risk exposure
|
| Main business objective / Strategy reference | Acting in effective and responsible manner | |
| Key risks, issues or areas of uncertainty |
|
|
| Potential
impact |
Orange Polska must comply with various regulatory obligations
governing the provision of services and products, particularly
related to obtaining and renewing licences. The regulatory
obligations result from legislation changes and administrative
decisions. Regulatory decisions and changes in the regulatory
environment may have an adverse effect on Orange Polska.
There is a risk of failure to achieve the expected return on investment due to decrease of co-financing with regard to POPC. Despite Orange Polska’s drive to strengthen its anti-corruption policy, corruption cases could occur due to the number of partners engaged and complex processes performed. This could have an adverse impact, particularly on Orange Polska’s. |
|
| Management approach and mitigation measures | In 2018, there were a number of changes in the legal environment
with respect to both general law and provisions specific to the
telecom sector. The legal and regulatory environment requires
constant and diligent monitoring, as well as allocating resources
to implement new regulations and prevent any noncompliance.
Orange Polska has implemented an Anti-Corruption Policy and Guidelines. These regulations contain detailed rules and standards as well as references to specific conditions and circumstances relating to the identification and mitigation of corruption risks. In addition, we have carried out a number of training and information campaigns to raise awareness of anticorruption laws and rules among employees. |
|
| An indication of each category’s current exposure relative to the previous year is shown by the arrow in the risk exposure column. |
|
Corporate governance
and regulatory, tax and
legal environment
and regulatory, tax and
legal environment
Revenues and profits
Exposure to
electromagnetic
fields
electromagnetic
fields
| Risk area | Exposure to electromagnetic fields (EMF) from radio equipment |
Risk exposure
|
| Main business objective / Strategy reference | Unmatched data connectivity
for households and businesses
Acting in effective and responsible manner |
|
| Key risks, issues or areas of uncertainty |
|
|
| Potential
impact |
Exposure to electromagnetic fields (EMF) from radio equipment (used mainly on mobile, but also fixed, networks) might raise concerns for their possible adverse effects on human health, even though the Polish EMF limit is much more restrictive than in most other EU countries, where the limit set in the Council Recommendation 1999/519/EC applies. If the abovementioned health risks were scientifically confirmed to a certain extent in the future, this would likely result in a decline in use of mobile telecommunications services, difficulties and additional expense in rolling out base stations and other wireless equipment, and an increase in litigation. | |
| Management approach and mitigation measures | The top management monitors compliance with regulatory requirements, emission limits and other legal requirements related to environmental protection. Furthermore, Orange Polska has implemented an environmental management system for provision of mobile services. | |
| An indication of each category’s current exposure relative to the previous year is shown by the arrow in the risk exposure column. |
|