Emerging risks are risks we do not expect to materially impact the company in the short term, but which do require prompt mitigation actions to prevent them from exceeding our risk appetite in the mid to long term. In 2022 we identified two emerging risks: market disruptors and climate change adaptation. We have already identified competition and climate change as main strategic risks.
We may not be able to keep up with the pace of technological development in the logistics and transportation industry and may find it difficult to compete in our core markets if one of the ‘tech giants’ decides to enter the Benelux market with a new product/service offering based on disruptive new technology and engages in direct competition with PostNL/decides to integrate PostNL’s network into its operations. Our financial performance and position may be materially impacted should this risk occur.
We serve our customers with three core activities: collection, sorting, and delivery. Digitalisation helps us sharpen and improve these activities. In this way, our customers can count on smart logistics solutions and stronger customer experiences. Investing in further digitalisation, data analysis, and innovation of our products and processes helps increase our overall economic productivity. This enables us to remain a relevant and competitive player in the postal market in the future. For more information see the 'Customer value' chapter.
Climate change is an increasingly important topic on the agenda of society and of PostNL's stakeholders. While the focus of many has been on mitigating climate change, the effects of climate change on society are becoming more apparent. Acute and chronic extreme weather events are increasingly affecting society, for example the destruction caused by storm Eunice in the northern half of the Netherlands.
An increase in unexpected extreme weather events, such as heat waves, snowfall, storms or floods, may lead to business disruption and recovery of more than two days, resulting in cost increases and loss in revenue. While there is continuing uncertainty about how climate change will evolve, we do consider physical climate risks in location planning and perform climate-related assessments in business continuity plans. Based on extensive studies by the Dutch meteorological institute (KNMI) and internal evaluation of climate change-related weather events, PostNL concluded that chronic climate change-related effects will likely not pose material financial risks in the scenarios envisaged for the locations PostNL has its direct operations. Acute climate-related events could temporarily affect PostNL, which is why mitigating actions are designed for and included in the company’s business continuity plans.