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Tesco (TSCDY) Risk Analysis

Public companies are required to disclose risks that can affect the business and impact the stock. These disclosures are known as “Risk Factors”. Companies disclose these risks in their yearly (Form 10-K), quarterly earnings (Form 10-Q), or “foreign private issuer” reports (Form 20-F). Risk factors show the challenges a company faces. Investors can consider the worst-case scenarios before making an investment. TipRanks’ Risk Analysis categorizes risks based on proprietary classification algorithms and machine learning. Tesco disclosed 15 risk factors in its most recent earnings report. Tesco reported the most risks in the “Finance & Corporate” category.

Risk Overview Q4, 2021

Source: the company's latest filing for the period ended May 18, 2021, filed May 18, 2021

Risk Distribution
15Risks
Sector Avg.Finance & CorporateTech & InnovationLegal & RegulatoryProductionAbility to SellMacro & Political
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Risk Change Over Time

No filing history is available.

Risks removedRisks addedRisks changedTesco Risk Factors
  • Natural and Human Disruptions - Risk 1
    Climate change

    Climate change has the potential to change dramatically the world in which we live and operate, and tackling climate change, by taking measures to limit its impact to manageable levels, has become a key priority for governments, businesses and citizens around the world. Even if manageable, the effect of climate change will be quite profound, and these measures will themselves have a significant impact on economies and the choices people make. Climate change has, therefore, moved from an emerging risk to a principal risk for the business. Climate change has become a widely acknowledged global emergency, moving from an emerging risk to a principal risk for the business. New risk - Our Little Helps Plan on pages 12 to 16 sets out our ambitions and action plans for addressing climate change. The Board's Corporate Responsibility Committee provides governance and oversight. - We have established a number of metrics with appropriate management oversight and governance mechanisms to enable us to monitor progress. We are working with third-party organisations to continue developing this suite of metrics. There is a level of external assurance over the metrics, and we are working to further enhance and extend this. - We seek to align our climate-related ambitions with our financial policies and have launched our first sustainability-linked bond. We have also extended our climate-related financial disclosures.

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Risk Highlights Q4, 2021

Main Risk Category
Finance & Corporate
With 4 Risks
Number of Disclosed Risks
15
+1
From last report
S&P 500 Average: 32
Recent Changes
1Risks added
0Risks removed
0Risks changed
Since May 2021
Number of Risk Changed
0
No changes from last report
S&P 500 Average: 1

Risk Word Cloud

climate changeclimate changedata security and data privacydata securitydata security and data privacydata privacy

Risk Factors Full Breakdown - Total Risks 15

Debt & Financing1 | 6.7%
  • Debt & Financing - Risk 1
    Tesco Bank

    Tesco Bank is exposed to a number of risks, the most significant of which are operational, regulatory, credit, funding, liquidity, market and business risk. The pandemic has resulted in lower trading activity, lending balances and income in the Bank and increased provisions for expected credit losses, reflecting forecast unemployment, resulting in a loss for the year. The Bank continues to actively manage the risks to which it is exposed and maintains significant regulatory capital. While the overall risks facing the Bank are similar to that of a year ago, the risk profile is judged to have increased, reflecting the uncertainty as to the timing and strength of a recovery in the economy on which the financial performance of the Bank relies. Risk increasing - The Bank has a formal structure for reporting, monitoring and managing risks. This comprises, at its highest level, the Bank's risk appetite, approved by the Bank Board and supported by the risk management framework. - The Tesco PLC Board also reviews and approves the Bank's financial risk appetite. Risk appetite defines the type and amount of risk that the Bank is prepared to accept to meet its strategic objectives. It forms a link between the day-to-day risk management of the business and its strategic priorities, long-term plan, capital planning and stress-testing. Adherence to risk appetite is monitored monthly. - The risk management framework brings together governance, risk appetite, the three lines of defence, the policy framework and risk management tools to support the business in managing risk as part of its day-to-day activities. The framework includes scenario analysis and regular stress-testing of financial resilience. - There is Bank Board risk reporting throughout the year, with updates to the Tesco PLC Audit Committee provided by the Bank's Chief Financial Officer and Audit Committee Chairman. A member of the Tesco PLC Board or Executive Committee is normally a member of the Bank's Board to enhance visibility and knowledge sharing.

Corporate Activity and Growth3 | 20.0%

See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.

FAQ

What are “Risk Factors”?
Risk factors are any situations or occurrences that could make investing in a company risky. The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment. They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result. It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.
How do companies disclose their risk factors?
Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process. Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”. Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report. According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.
How can I use TipRanks risk factors in my stock research?
Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing. You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector. Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements. A simplified analysis of risk factors is unique to TipRanks.
What are all the risk factor categories?
TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below. 1. Financial & Corporate Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results. Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing. Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments. Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances. 2. Legal & Regulatory Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company. Regulation – risks related to compliance, GDPR, and new legislation. Environmental / Social – risks related to environmental regulation and to data privacy. Taxation & Government Incentives – risks related to taxation and changes in government incentives. 3. Production Costs – risks related to costs of production including commodity prices, future contracts, inventory. Supply Chain – risks related to the company’s suppliers. Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls. Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation. 4. Technology & Innovation Innovation / R&D – risks related to innovation and new product development. Technology – risks related to the company’s reliance on technology. Cyber Security – risks related to securing the company’s digital assets and from cyber attacks. Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying. 5. Ability to Sell Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers. Competition – risks related to the company’s competition including substitutes. Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration. Brand & Reputation – risks related to the company’s brand and reputation. 6. Macro & Political Economy & Political Environment – risks related to changes in economic and political conditions. Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19. International Operations – risks related to the global nature of the company. Capital Markets – risks related to exchange rates and trade, cryptocurrency.