Main risk eventsMain risks and opportunitiesEmerging risks

Main risks and opportunities

Strategic risks and opportunities

PostNL Strategic risks and opportunities

TopicKey material topicRisk levelTrendRisk summaryOpportunity summary
Competition
Financial performance and position
Pressure on market share, volumes and pricing impacting revenues and profitability
  • Outperforming market with high delivery quality and network coverage
  • Investments in Digital and initiatives to increase our customer satisfaction
  • As a company, we invest in the 'Special Moments Fund' and sports sponsorship, which also contributes to branding
Geopolitical tensions and CBS growth
Financial performance and position
The significant growth of international customers through Spring, a provider of global e-commerce solutions, elevates PostNL's geographic risk exposure, particularly regarding international regulations, market volatility, and the increasing dependence on the China-Europe trade lane, potentially impacting financial performance and customer concentration risk.
  • The development of new markets in Asia 
  • Targeting of new major customers in China
  • Further growth of our business in (Eastern) Europe and Canada/USA
  • Diversification and reduced dependency on Benelux market.
Climate change
Climate change
Failure to achieve our long-term carbon emission reduction goals can have an adverse impact on our licence to operate, reputation and financial performance
  • Providing innovative solutions to help logistic partners (outsourced transport) accelerate towards low carbon operations through value chain collaboration
  • Influence policymakers to make more subsidies available to achieve our sustainability goals more quickly
  • The acceleration of emission-free city logistics creates potential to help other, less well-prepared parties, with logistic services in zero-emission zones in cities
Implementation of strategic change projects
Customer experience and digital solutions
Delay in digital transformation and achieving our business objectives due to challenges executing a broad range of large change projects at the same time. This may impact our medium-term targets on customer experience and operational efficiency
  • Strengthening our governance, capabilities and investments in digital domain as foundation for acceleration of our digitalisation
  • Solid prioritising initiatives to shorten time to market of relevant changes through our agile operating model and customer journey factory
Sustainable financial situation MailNL
Accessible, reliable and affordable services
Acceleration of decline in physical mail impacting revenues, combined with significant labour cost increases and tight USO requirements on service levels including next day delivery impacting operating expenses, has a noticeable impact on the profitability of MailNL, and as such on the sustainable financial situation of MailNL.
  • Demonstrating the value of physical mail as relevant communication channel for customers; Stimulate growth in letterbox packages
  • Ongoing cost reductions within the regulatory framework
  • Our product pricing in accordance with USO regulation results in annual tariff adjustments, which partially offsets the impact of volume decline on revenue
Network capacity and flexibility
Customer experience and digital solutions; Accessible, reliable and affordable services
Network not flexible enough to scale up or down swiftly enough in response to increase/decrease in volumes, which imposes higher risk of operational failures, inefficiency, higher costs and a decrease in customer satisfaction which may have an impact on our competitive position.
  • Creating flexibility in our network capacity enabling us to scale up or down swiftly in response to market volatility to safeguard customer and consumer service levels
  • Collaborating closely with e-commerce partners and customers to manage volume expectations and optimise operational volumes during peak periods can lead to improved customer satisfaction and potentially increased market share.

Download spreadsheet

Risk description

Response

Competition
Competition continues to put pressure on our market share, volumes, and prices in e-commerce-related activities, which could have an adverse effect on revenues and profitability. Our delivery quality levels, which are critical drivers of our success, are strongly affected by the tight labour market. If our competitors overtake our lead in delivery quality and customer satisfaction decreases, it could have significant implications for our market share. Additionally, there is a risk of losing customer volume due to dual vendorship, whether this arises from an inability to guarantee the requested capacity or not. In the competitive landscape, three main areas relate to developments by established logistics players:
  • New entrants with significant funding are entering the traditional market with innovative, digital and data- driven business models, to attract both smaller and larger customers
  • Large platform businesses are becoming more dominant leading to concentration of volumes and increased purchasing power
  • Value chain integration is developing rapidly, enabling parties to offer distinctive customer experiences.

Mitigation
  • Margin management, efficiency improvements, leveraging from economies of scale
  • Accelerating our digital transformation, redesign of our customer journeys with a standardised methodology, and further improving sustainability across the company to improve NPS
  • Multiple commercial initiatives, including service-level differentiation, (new) products and pricing, and quality improvements in relation to network coverage and operational excellence
  • Be even more customer centric in improving our business by ensuring flexibility during the peak season, thereby safeguarding customer and consumer service levels
  • Establishing collective labour agreements with robust wage structures, including monitoring of delivery partners' rate setting.
Further information regarding competition can be found in the chapter 'Our strategy'.
Geopolitical tensions and CBS growth
The robust growth of international customers through Spring, a provider of global e-commerce solutions, increases PostNL's geographic risk profile, particularly due to heightened exposure to international regulations and market volatility. As Spring becomes a larger part of our revenues, factors such as political instability abroad, customs complexities, sanctions legislation, and currency fluctuations have a greater impact.One concern is the growing dependence on the China-Europe trade lane, increasingly impacting our financial performance (both in terms of balance sheet and P&L). The market growth in international parcel deliveries further exposes us to Chinese regulatory requirements and heightens our dependence on a select group of key accounts, which may lead to an increased risk of client concentration.
Mitigation
Our de-risking strategy involves diversification, spread across different countries in Asia to minimise concentration risk, regularly assess potential threats, and implement measures to mitigate them. Stay informed about market trends, geopolitical developments, and emerging risks to make informed decisions. Additionally, we mitigate risk by expanding our footprint in both Europe and Asia to make us less dependable on China - EU flows.Further information can be found in the chapter 'Our strategy'.
Climate change
The growth of our business not only means we require more energy for our buildings and transport, it also places greater urgency on reducing our greenhouse gas emissions. We have set ambitious targets towards 2030 to significantly decarbonise our business and have identified three key risk factors that could impair our ability to meet these targets.
  1. Our dependency on reducing the emissions of outsourced transport, which accounts for a significant percentage of our transport activities
  2. Our dependency on technological innovations, such as the availability of zero-emission or low-carbon vehicles, and the availability of the required (electric) charging infrastructure and energy
  3. The agility of our logistics business model, particularly at Parcels. Not being able to adapt our business and operational model in a commercially viable way in time to meet the increasing climate-related expectations of customers and society in general will negatively impair our reputation and financial performance. This could lead to a loss of revenue based on customer decisions and increased costs due to expensive investments or carbon taxes. Additionally, our ability to align the progress and advancements we make in sustainable practices with the societal perception of visible sustainability is crucial to avoid disconnect and further uphold our reputation and financial performance.

Mitigation
  • Executing and refining our concrete action plan in the short, medium, and long term, including delivering all parcels and letters emission-free in the last mile in the Benelux region by 2030 and becoming net zero by 2050., focusing primarily on the transition towards an electric fleet and renewable fuels and energy as a transitional measure to cut carbon emissions
  • Realise network efficiencies through innovative solutions to cut the number of kilometres we travel, and become less carbon intensive in our operations
  • Working together with customers on reducing greenhouse gas emissions in the value chain, for example by focussing on creating a more equal flow in both transport and last-mile delivery and developing solutions for sustainable packaging
  • Engaging with delivery partners on awareness, strategy on mutual objectives, financial incentives to help transition to an electric fleet, and ensure sufficient charging infrastructure
  • Use sustainable finance to fund our environmental investments
  • Continue to enhance the climate impact and energy efficiency of our buildings and facilities to reduce our emissions.
More information on our climate change performance can be found in the ‘Environmental value’ chapter.
Sustainable financial situation at Mail in the Netherlands
The ongoing trend of increased digital communication in society is leading to continuing decline in the physical mail market. Substitution, coupled with an acceleration in cost development, is impacting our revenue and profitability. As the universal service provider (USP) under the universal service obligation (USO), it is becoming infeasible to meet the stringent USO requirements with the corresponding necessary fixed costs, while ensuring that the network is profitable. It is important to adjust our whole postal network to the market circumstances. As a result, we will start to discuss the future USO with the ministry of 'Economische Zaken and Klimaat' (EZK).
Mitigation
  • Taking commercial initiatives to slow down or adapt to substitution, for example by introducing a range of new services and solutions, and the rationalisation of existing services, service levels and solutions
  • Marketing the value of physical mail, for example by helping e-commerce players discover the power of physical direct mail
  • Adapting our operational business model to become more flexible in our response to further volume decline and (labour) cost increases
  • Reassess the service levels we offer under the current USO.
More information can be found in the 'Our operating context', 'Customer value' and 'Financial value' chapters.
Implementation of strategic change projects
To make progress on the three elements of our strategic pillars (manage Parcels for sustainable growth, manage Mail in the Netherlands for value, and accelerate digitalisation), we are implementing different strategic changes simultaneously. Not making sufficient progress on any of our pillars could negatively impact our growth, profitability, operational efficiency, cash conversion, and required cost savings.Implementing strategic changes requires us to focus on effective stakeholder and project management so that we can adequately prioritise the allocation of resources.Organisational agility is also key to foresee short-term developments and changes in business needs. Due to a tight labour market, hiring sufficient people to implement change projects is challenging and has placed our capacity to change at the desired pace at risk. Delays in planned improvements in line with our ambitious digitalisation programme will negatively impact our competitive position as PostNL may not be able to keep up with the pace of technological development in the logistics sector. Implementing strategic change projects inherently increases the risk of temporarily ineffective internal controls.
Mitigation
  • Aiming for a stable and sufficient cash flow to allow for acceleration of our digitalisation through significant investments
  • Strengthening our governance, capabilities and organisation through formalising and expanding our digitalisation activities in a dedicated business unit
  • Reorganisation that leads to a clear and effective structure that allows us to better anticipate and respond to technology and market developments. We will achieve this through a clear division of tasks and responsibilities, fewer discrepancies in decision-making, and fewer layers within the organisation. Additionally, we will ensure there are no duplication of roles and actionable and manageable management responsibilities and tasks.

Network capacity and flexibility
Increased volatility in the market may put pressure on the required flexibility of the capacity of our Parcels network to scale up or down. Investments in our logistical infrastructure are typically fixed over the short term. Not being able to scale up as required may impose a higher risk of operational failures, for example due to disruptions in logistics processes and a decrease in customer satisfaction. Not being able to scale down as required may also increase the risk of operational inefficiencies and higher costs, which may impact our competitive position. Uncertainties due to macroeconomic climate requires us to have a more flexible network.
Mitigation
  • Effective management and coordination of our network access to prevent operational congestion. This approach enhances our capability to preserve network integrity and consistently deliver a relatively high-quality service
  • PostNL regularly adjusts its network capacity to the projected and (where possible) actual volume developments within the limits of a tight labour market. The necessary flexibility for peak season will be maintained to safeguard customer and consumer service levels
  • Collaborating with customers and partners in the e- commerce value chain to manage volume expectations and to manage the peak moments in our operational volumes
  • We are developing additional capabilities to more rapidly and precisely adjust our network capacity to changes in demand. Reducing the critical path in lead time for scaling up and down is essential to follow volume developments.

Download spreadsheet

Operational risks and opportunities

PostNL Operational risks and opportunities

TopicKey material topicRisk levelTrendRisk summaryOpportunity summary
Employee attraction, development and retention
People attraction, development and retention;
Health, safety and well-being
The tight labour market, high turnover rates, and human rights' concerns among delivery partners pose risks to PostNL's ability to attract and retain qualified personnel, potentially impacting employee well-being, safety, and overall service quality. A lack of motivated employees due to a tight labour market and/or not being an attractive employer.Strengthen employee branding of PostNL by promoting the company as an attractive employer and as a diverse global company.Improving employee satisfaction and well-beingIncreased productivity and stronger corporate imageAs a company, we invest in the Special Moments Fund and sports sponsorship, which also contributes to employee branding 
Execution of cost-saving initiatives
People attraction, development and retention;
Accessible, reliable and affordable services
Unsuccessful or delayed cost-saving initiatives, impairing cost savings and employee engagementUse our experience in realising cost savings as example for implementing other similar initiativesJob mobility opportunities from Mail in the Netherlands to Parcels and vice versa
Availability of energy resources
Customer experience and digital solutions; Accessible, reliable and affordable services
High prices and scarcity of energy resources leading to unavailability may impact the quality and continuity of our business processes, our cost effectiveness and our reputationPrice advantage by buying energy on the futures marketPostNL contributes to a social goal when becoming more sustainableLess consumption and more self-generation lead to less dependence on the volatile energy market and energy infrastructure
Information Technology and Cybersecurity
Customer experience and digital solutions; Data security and protection
Ineffective IT management systems leading to issues in e.g., availability, integrity, and confidentiality may impair the quality of our business processes, cost effectiveness and/or reputationPhasing out legacy systems and becoming more data driven to enhance insights for PostNL and customers in a faster, more accurate and more meaningful wayDigital ethics risk management frameworkDedicated privacy controls

Download spreadsheet

Risk description

Response

Employee attraction, development and retention
People are at the heart of the services we provide to our customers. The labour market has become extremely tight, in both our operations and specialist functions. Employee turnover rates are relatively high compared to other sectors, while the reports of alleged human rights breaches, despite mutual agreements with delivery partners (such as a lack of fair remuneration for employees in the chain), may also negatively impact the reputation of PostNL as an attractive employer. These factors impose risks for PostNL in attracting, developing and retaining qualified personnel. In a difficult contest for employees in our markets, it is important to be distinctive and attractive as an employer.To maintain and enhance the highest level of physical, mental, and social well-being of our employees, we are dedicated to creating a workplace that protects our people's health and safety, with a focus on preventing work-related injuries and illnesses. Occupational safety remains a critical priority for us. Insufficient attention to working conditions and adherence to safety standards may result in unsafe work environments, a risk that we are proactively addressing. Additionally, the tight labour market has led to increased workloads and decreased job satisfaction among employees in certain sectors of the organisation, thereby heightening the risk of increased absenteeism. This rise in absenteeism can have a direct impact on our productivity and the quality of service in both Mail in the Netherlands and Parcels, and, over the long term, affect our corporate culture. The absenteeism percentage rose to 7.7% in 2023 (2022: 7.4%), exceeding the broader trend observed in the Netherlands.
Mitigation
  • Innovation through online recruitment techniques and continuously improving the employee experience, for example by investing more in employer branding in addition to recruiting for individual jobs
  • Prioritising the safety and well-being of people more effectively in challenging times, thereby demonstrating the care we have for our people, by continuing to invest in training and health and safety measures. Our certified ISO:45001 management system helps us with the structured management of the health and safety of people working with or for us. This includes identifying and following up on areas for improvement
  • To increase PostNL’s attractiveness as an employer, we are investing in recruitment campaigns for potential employees, as well as retraining, retention, and development of our current staff.
More information on these and similar initiatives can be found in the 'Social value' chapter.
Execution of cost-saving initiatives
Due to market decline in our Mail in the Netherlands business and flattening volume growth in parcels, realising cost savings is one of the key elements for a sustainable business performance. Examples include streamlining our workforce, enhancing the efficiency of our infrastructure, and reducing overhead costs. Delays in, or ineffective execution of, cost-saving initiatives could lead to inefficiencies, negatively impacting the quality of our services as well as impacting employee motivation levels. Also, for MailNL it is more and more difficult after all the optimizations to find sufficient cost savings. These may result in lower profitability, cash flow and damage our reputation.
Mitigation
  • Cost-savings projects are executed via enhanced programmes and are monitored continuously by a transformation office
  • Mechanisms to adjust to changing circumstances have been implemented and are reviewed periodically. Execution via pilots and in close collaboration with the Works Council enables smooth implementation on a larger scale
  • Digitise our core logistics process and systems as well as our commercial processes, where this helps to improve our business in the short term, and invest for the longer term, as long as the pay-back period is less than three years.
Additional information on these initiatives can be found in the 'Customer value' chapter.
Availability of energy resources
The risk of disruption due to high prices and/or scarcity of energy resources may impact the quality of our business processes, cost effectiveness and/or reputation. Fuel and energy represent a substantial expense for our company and is an important aspect of our logistical operating model. Network congestion in the Netherlands may lead to delays in the transition towards an electric fleet, as the necessary charging infrastructure may not be placed in time across the entire country. The added complexity and uncertainty associated with the climate-related changes may affect our operational, sustainability and financial performance through higher than anticipated organic costs and/or scarcity of energy resources.
Mitigation
  • Purchase energy on the futures market so that the company's energy requirements are as secure as possible. At the same time, secure the necessary contract/delivery capabilities per location. We will also engage external energy advisers to regularly monitor the risk, and further manage energy data so that we are sure that we are purchasing the energy we require
  • Self-generate as much energy as we can to reduce our dependency on external sources (for example by working towards self-sufficient buildings), look for alternative forms of (temporary) energy generation/self-sufficiency and, over the long term, make it available to our delivery partners
  • Reduce energy consumption by making assets more sustainable and identify energy storage areas in the event of grid congestion.

Information technology and cybersecurity
In an increasingly data-driven and digitised world, PostNL recognises the growing dependency on information technology (IT) and data-driven strategies to maximise customer benefits and logistics optimisation. Threats to the availability, confidentiality or integrity of our IT networks, systems or (customer) data caused by IT disturbances, cyberattacks or lack of appropriate security and infrastructure measures may disrupt our business activities, thereby affecting our ability to provide our services as required and to the high quality levels we demand. They may also result in the loss or theft of customer data, material cost increases, penalties, as well as damage to our reputation.As a logistics company, we use logistics optimisation/ prediction models, applying techniques including artificial intelligence, machine learning and robotics. These models contain personal and sensitive data, which inherently carries the risk of insufficient protection against data breaches or unauthorised access, posing a threat to privacy. Such breaches have the potential to not only result in legal sanctions and financial losses, but also to damage our reputation and the trust relationship with our customers. It is critical to continuously evaluate and improve our data privacy protocols and security strategies to meet both legal requirements and the ethical expectations of our stakeholders.
Mitigation
  • Professional and dedicated IT and cybersecurity management at Group level supported by de-centralised cybersecurity coordinators on all relevant IT systems used by PostNL, including continuous improvement based on issues identified and IT and cyber-related developments
  • Improvements in our data management based on monitoring and steering by our Data Governance board
  • Evaluating and improving the resilience of critical applications based on frequent measurements and testing against stringent criteria, and implementation of action plans to keep our applications up to date
  • Continuing to phase out legacy systems to improve the overall stability of IT applications and infrastructure.

Download spreadsheet

Compliance risks and opportunities

PostNL Compliance risks and opportunities

TopicKey material topicRisk levelTrendRisk summaryOpportunity summary
Supply chain accountability
Business conduct; Human rights and labour practices; Data security and protection
Working with third-party suppliers poses supply-chain accountability and operational risks, including legal disputes, fines, and reputational damage, while outsourcing IT and cloud-based technologies also heightens cybersecurity, data security, and system reliability risks.Strategic Partnerships: Leveraging expertise and innovation from quality suppliersIT Security: Strengthening protections against IT breaches
Legal and regulatory developments
Business conduct; Accessible, reliable and affordable services
Non-compliance with current or inadequate adaptation with future laws and regulation adversely impacting business operations, our reputation and on our financial performanceContinuing management focus on understanding and implementing new and revised regulatory requirements and anticipating on potential impactsContinuous dialogue with governmental and non-governmental stakeholders about compliance requirements to manage our compliance effectively

Download spreadsheet

Risk description

Response

Supply chain accountability
Working with third-party suppliers to deliver products and services to our customers entails supply chain accountability with corresponding risks. Our company could potentially face accountability for regulatory non-compliance by our suppliers, including in some cases their failure to comply with labour laws, environmental standards, transport safety regulations, or ethical guidelines. This could result in legal disputes, fines, and damage to our reputation, potentially undermining the stability and trust in our company.Outsourcing these services not only introduces significant compliance risks but also operational risks. Disruptions or inefficiencies in the supply chain, resulting from the suboptimal performance of these external entities, can potentially negatively impact our delivery quality and customer satisfaction. This risk is particularly evident in three sectors: delivery partners, IT services, and staffing agencies. Finally, reliance on outsourced IT and cloud-based technologies impacts risks related to cybersecurity and data security, system reliability, and potential breaches.
Mitigation
  • We are modifying contracts with staffing agencies to include a ‘right to audit’ clause, for regular monitoring and assurance of compliance with labour conditions and compliance requirements
  • New due diligence process for delivery partners to thoroughly assess their operational and compliance capabilities
  • Management of cloud suppliers through robust assessments based on a strict control framework
  • Closely monitoring emerging societal expectations and increasing compliance demands to proactively anticipate and respond to them.

Legal & regulatory developments
Regulatory requirements are increasing and becoming more complex in the markets we operate in. These regulations cover a broad range of topics, including postal law, transport and safety law, competition law, regulation related to dangerous and prohibited goods, customs regulations, labour practices, data protection and privacy, and environmental standards.In relation to our responsibilities as the universal service provider (USP) under the universal service obligation (USO), changes to the postal law (which are in development) and the ruling on the Sandd takeover may lead to additional operational costs. It may also impose additional legal and administrative costs.Compliance with laws and regulations is vital to demonstrate our commitment to sound business conduct and maintaining our license to operate. Misinterpretation of new or changed regulations or ineffective internal controls could lead to non-compliance. This may lead to sanctions, including fines and business restrictions, which could materially negatively impact our financial performance, continuation of services to customers, and our reputation.
Mitigation
  • Continuous implementation and improvement of appropriate policies, processes and internal control procedures to limit exposure to complex legal and regulatory requirements, such as human rights, health and safety, transport and due diligence for delivery partners
  • Operating a robust integrity programme that includes business principles and creating awareness. One example is the release of a mandatory e-learning on integrity
  • Have dialogue with governmental and non-governmental stakeholders on a continuous basis about the interpretation of, and compliance with, regulations. For example, in relation to the USO regulations on national and EU levels
  • Ensure we adapt our operations in time to legal and regulatory requirement changes.

Download spreadsheet

Financial risks and opportunities

PostNL Financial risks and opportunities

TopicKey material topicRisk levelTrendRisk summaryOpportunity summary
Total cost of labour
Financial performance and position
Higher than anticipated total cost of labour and opportunity costs due to operational disruptionsRealising agreements with trade unions on mutually beneficial conditions based on good relationshipsTimely and effective conclusion of collective labour agreements for our people
Liability for loss or damage
Financial performance and position
Exposure to claims for loss or damage adversely impacting our financial performanceUsing data and analysis to identify the most impactful improvement areas in our loss prevention and quality levels

Download spreadsheet

Risk description

Response

Total cost of labour
Being a good employer is vital to us. One aspect of this is the terms and conditions under which we hire our personnel and employ outsourced labour. These terms and conditions, including salaries and other secondary benefits, represent a substantial company expense and are an important component of our operating model. Our financial performance could be affected by higher than anticipated total costs of labour and/or other related expenses, which we may not be able to efficiently or promptly adjust within our pricing model.Opportunity costs due to operational disruptions as a result of action by trade unions and/or action triggered by media attention may impact our financial performance. The current economic climate is characterised by rising labour costs and increased collective labour-related indexations due to relatively high inflation. We expect that wages will further increase in 2024, due to minimum wage increases. Employee expectations regarding salary increases may be higher than we can offer financially to achieve our strategic objectives while taking into account the highly competitive market.
Mitigation
  • Establishing collective labour agreements with robust wage agreements. In addition, the impact of the WML (moving to a 'minimum hourly wage' instead of a 'minimum wage') will take effect from 1 January 2024
  • Maintaining good relations with the trade unions and social partners based on mutual recognition of shared interests. Additionally, we are evaluating the sustainability and financial feasibility of our labour model and are researching alternative solutions, as an attractive employer, to make it future-proof.

Liability for loss or damage
We are exposed to claims for loss or damage. Some of these exposures are covered under conventions such as the United Postal Union, the Warsaw Convention or the Convention on the Contract for the International Carriage of Goods by Road, as well as PostNL’s general terms and conditions. PostNL also has limited liability under the Postal Act. Claims for loss or damage not covered under these conventions or PostNL’s general terms and conditions may negatively affect our financial performance. Our exposure to this risk is increasing as a result of the growing volume of e-commerce parcel deliveries and new initiatives in our portfolio, which on average is higher in value per parcel.
Mitigation
  • Maintaining insurance policies in relation to our business and assets with reputable underwriters and/or insurance companies against claims for loss or damage to the extent not covered by conventions, and to the extent that is usual for companies like ours 
  • A dedicated loss prevention steering committee with a strong focus on:
    • Strengthening contractual agreements with customers, clearly defining liability limits and conditions 
    • Taking data as the foundation in the form of a 'digital twin' to monitor and analyse the physical flow of packages 
    • Strengthening physical security management.

Download spreadsheet

Next Previous