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The delivery of our strategic objectives, sustainable growth and long-term shareholder value is dependent on effective risk management. The diversified nature of our operations, geographical reach, physical and technological assets and currencies are important factors in mitigating the risk of us missing our strategic goals.
As with any business, risks and uncertainties are inherent in our business activities and these risks may have a financial, operational, environmental and reputational impact. It is through a structured approach to risk management that we are able to mitigate and manage risks and embrace opportunities when they arise.
The Board is accountable for effective risk management, for agreeing the principal, including emerging, risks facing the Group and ensuring that these are successfully managed. The Board undertakes a robust annual assessment of the principal and emerging risks that would threaten the business model, future performance, solvency or liquidity. The Board also monitors the Group’s exposure to risks as part of the business performance reviews conducted at each Board meeting, providing the Board with an opportunity to discuss risk mitigation actions with divisional senior management.
Our decentralised business model empowers the management of our businesses to identify, evaluate and manage the risks they face to ensure each business’s compliance with relevant legislation, our business principles and Group policies. Their risk assessments are wide-ranging and consider operational, environmental, including climate change, and other external risks, in the context of the overall materiality, key controls and relevance to the markets in which they operate. The divisional chief executives individually present their division’s consolidated risks to the Director of Financial Control and the Group Chief Financial Officer on an annual basis, who review and challenge them.
Emerging risks are identified and considered at both a Group and business unit level, as part of the overall risk management process. They are identified through a variety of horizon-scanning methods including: geopolitical insights; ongoing assessments of competitor activity and market factors; workshops and management meetings focused on risk identification; analysis of existing risks using industry knowledge and experience to understand how these risks may affect us in the future; and representation and participation in key industry associations.
Group functional heads including Legal, Treasury, Tax, IT, Pensions, HR, Procurement and Insurance also assess the key risks in their functional area, together with the controls that are in place or planned to mitigate them. The Director of Financial Control takes these perspectives and combines them with the business risk assessments to create a consolidated view of the Group’s risk profile. A summary of these risk assessments is then shared and discussed with the Group Chief Financial Officer and Chief Executive at least annually.
The Director of Financial Control holds meetings with each of the non-executive directors seeking their feedback on the reviews performed and discussing the key risks and mitigating activities identified through the risk assessment exercise. Once all non-executive directors have been consulted, a Board report is prepared summarising the full process and providing an assessment of the status of risk management across the Group. The key risks, mitigating controls and relevant policies are then summarised and the Board confirms the Group’s principal and emerging risks. These are the risks which could prevent ABF from delivering our strategic objectives.
This report also details when formal updates relating to the key risks will be provided to the Board
Effective risk management processes and internal controls
We continued to seek improvements in our risk management processes to ensure the quality and integrity of information and the ability to respond swiftly to direct risks. During the year, the Audit Committee on behalf of the Board conducted reviews on the effectiveness of the Group’s risk management processes and internal controls in accordance with the applicable requirements of the UK Corporate Governance Code. The Audit Committee have also been provided with regular updates on the progress of the programme for meeting the requirements of provision 29 of the 2024 UK Corporate Governance Code, which is nearing completion.
Our approach to risk management and systems of internal control is in line with the requirements of the Code.
The Board is satisfied that internal controls were properly maintained, and that principal and emerging risks are being appropriately identified and managed.
Business transformation
Following a comprehensive strategic review during the year, the Board concluded that separating Primark from the rest of the Group would enhance long‑term shareholder value by enabling both businesses to pursue focused strategies and align management incentives more closely with their distinct operating models.
By its very nature, any demerger has inherent risks, which include dis-synergies arising from the loss of scale and purchasing leverage, and distracting management from business as usual.
The Group has established a comprehensive demerger programme with strong management disciplines that focuses on organisational structure and design, team development and retention, data management, reporting and retention, risk mitigation and strong project management. There is close oversight from both Executives and the Board.
Consumer behaviour
Consumer confidence remains low in a number of key markets, driven by pressures on consumer spending, particularly for those on lower incomes, and an increasing focus on health and nutrition.
Across a number of our markets, widespread accessibility to GLP-1 medications like Ozempic and Wegovy, together with government health initiatives, are having a multifaceted impact on consumer behaviour in the food and beverage sectors and are presenting both risks and opportunities to the Group.
All of our businesses continue to develop strategies considering the potential changes in both end consumer and our customer behaviours and demands, the implications for the business and where investment or changes to business models may be appropriate. New product development and formulation continue to be central to the success of the Group.
Cyber security
The cyber security risk landscape has continued to evolve with threats being ever more sophisticated, organised and aggressive, and the rapid development of artificial intelligence models has the potential to increase the scale, speed and sophistication of cyber threats faced by businesses.
A successful cyber-attack due to malicious activity by an internal or external threat actor could result in data loss, operational disruption, non-compliance with regulations and/or loss of customer confidence.
Artificial intelligence and emerging technologies
The Group is expanding its use of AI-enabled tools while assessing their potential benefits and associated risks. To ensure that the appropriate benefits are achieved, there is a requirement for effective governance and oversight to minimise the risk of inappropriate use, development or deployment of AI and to maintain compliance with evolving regulatory frameworks.
A failure to do this could result in flawed business decisions, breaches of intellectual property, unauthorised disclosure of confidential information and cybersecurity vulnerabilities. Given the Group's global footprint and extensive data flows, the use of AI also increases the importance of maintaining robust controls over data quality, privacy, security and ethical standards. Failures in these areas could lead to financial loss, operational disruption, legal liability, regulatory sanctions and reputational damage.
To mitigate these risks, the Group continues to evolve its AI governance framework, including policies and standards governing the responsible use of AI technologies. The Group seeks to balance the opportunities offered by AI with appropriate safeguards to ensure that its adoption supports long-term value creation while maintaining the trust of customers, employees, suppliers, investors and other stakeholders.
Cost pressures
Global macroeconomic conditions continue to be impacted by ongoing geopolitical instability, uncertain tariff regimes, extreme weather events, higher levels of inflation, higher employmentrelated costs and significant fluctuations in commodity prices. This is resulting in increased costs across our businesses.
Our teams continue to be innovative in looking for cost-saving initiatives and efficiencies through greater centralisation, outsourcing, reduced waste and an enhanced focus on procurement and sourcing disciplines.
Regulatory changes
Our businesses continue to face a large number of regulatory changes with ever-increasing complexity and variations in requirements across the markets in which we operate. The extent of change continues to have an impact on the capacity of management at a time when they are dealing with the ongoing challenges resulting from economic uncertainty, alongside the day-to-day growth of our businesses.
These regulations, and the associated extensive and diverse reporting requirements including those relating to environmental, social, product compliance, food and feed safety, workplace health and safety, all have cost and resource implications.
There are significant data demands to define, obtain, prepare, collate and report to meet the demands of the various authorities.
Commodity price volatility
Changes in commodity and energy prices can have a material impact on the Group’s operating results, asset values and cash flows.
ABF Sugar is exposed to European market prices in several geographies. This risk is exacerbated in the UK and European markets where beet prices are agreed ahead of the sugar that is produced.
Our management closely monitor positions and exposures and have established appropriate hedging protocols and strategies.
2024 UK Corporate Governance Code
The 2024 UK Corporate Governance Code applies to the Group for first time this financial year, except for provision 29 which will apply from financial year 2027 and require the Board to make a declaration on the effectiveness of the Group’s material controls as at the balance sheet date in the Annual Report.
The formal programme to ensure that we meet the requirements of provision 29 is nearing completion and has included formalising both Group and divisional management’s reporting on the effectiveness of the key controls designed to mitigate the impact of material risks. We consider that these measures will enable us to make the disclosures required by provision 29.
Our approach to risk management gives the authority to our business leaders to make decisions that enable them to deliver our strategy of delivering long-term value for our shareholders and other stakeholders as detailed on pages 12 to 15 of the Annual Report 2026. They achieve this by identifying and managing their risks within acceptable levels through our devolved operating model and our people, culture and values. These principles underline how we manage the Group within the Board’s risk appetite.
Divisional risks and their impact on business performance are reported during the year and are considered as part of the monthly and quarterly management review process.
The directors have carried out a robust assessment of the principal risks facing the Group, including emerging risks, that would threaten our business model, future performance, solvency or liquidity.
The Group is exposed to a variety of other risks related to areas such as human resources, community relations and competition. These are managed as part of the risk process and a number of these are referred to in the Responsibility section on pages 56 to 70 of the Annual Report 2026, and in the Responsibility section of our website.
The Group’s principal risks and uncertainties which we believe are likely to have the greatest current or near-term impact on our strategic and operational plans and reputation, and the key mitigating activities in place to address them, are outlined on pages 88 to 95 of the Annual Report 2026. These are the principal risks of the Group as a whole and are not in any order of priority.
