Risks related to GPW Group employees

 

The GPW Group’s operations and its ability to achieve the strategic objectives are strongly dependent its employees, their skills, availability, loyalty, and engagement in the Group’s objectives. Effective management of the GPW Group companies’ business requires recruitment of highly qualified employees. The skills of the Group employees are scarce due to the unique nature of the GPW Group companies’ operations.

 

Any increased turnover of key employees could temporarily affect the GPW Group’s effectiveness. Low engagement of employees, their unavailability or insufficient skills could affect the Group’s operation, financial position and results, as well as its ability to achieve the strategic targets.

 

Risk of contractors and business partners over which the GPW Group has limited control

The GPW Group’s activity depends on several third party service providers, including KDPW, KDPW_CCP as well as IT service providers. The ICT systems operated by the GPW Group companies for trading in financial instruments and commodities are highly specialised and customised, and are not widely used in Poland or elsewhere. Consequently, there is limited choice in service providers for such systems. There can be no assurance that any of the GPW Group’s providers will be able to continue to provide their services in an efficient manner, or at all, or that they will be able to adequately expand their services to meet the GPW Group’s needs.

 

System interruption or malfunction or the cessation of important services by any third party in whole or in part and GPW Group companies’ inability to make alternative arrangements in a timely manner could strongly affect the Group’s operation, financial position and results.

 

Risk of trading system malfunction

Safety and continuity of trading are among the key functions of GPW. The Group’s operations are strongly dependent on the effective functioning of its trading systems, which are subject to the risk of outages and security breaches. The reliability of the Group’s trading systems is as important as their efficiency. Mitigation of these risks is a priority of the Group. Prevention of emergencies and mitigation of their impact involves a range of measures including threat identification, risk analysis, development and testing of business continuity plans.

 

In the event that any of the GPW Group’s systems, or those of its third-party service providers, fail or operate slowly, it may cause any of the following to occur: unanticipated disruptions in services provided to the Group’s market members and clients; slower response times or delays in trade executions; incomplete or inaccurate recording or processing of trades; financial losses and liability to clients; litigation or other claims against the Group, including formal complaints with the Polish Financial Supervision Authority, proceedings or sanctions

 

 

Malfunctions in the trading system and other integrated IT systems could delay a trading session and therefore cause a reduction in the volume of trading and affect confidence in the market, which could have a material adverse effect on the Group’s results, its financial position or development prospects.

 

Risk of security breach in the Group’s IT systems caused by third parties

The GPW Group’s electronic trading platforms involve the storage and transmission of its clients’ proprietary information. Secure transmission of confidential information is a crucial element of GPW’s operations. A failure of a platform, including a security breach, could expose the GPW Group to a risk of loss of such information, and, in consequence, the risk of litigation and possible liability.

 

The GPW Group may be required to expend significant resources to protect against the threat of security breaches or to mitigate occurring problems, including reputational harm caused by any security breaches. The above factors may strongly affect the GPW Group’s operation, financial position and results.

 

Reputation risk

GPW’s operation relies on safety and continuity of trading ensued by operational excellence and highly qualified employees. The specificity of the GPW Group’s business requires unique confidence of clients, which may be breached due to events which undermine or impair the GPW Group companies’ reputation.

 

 

If the GPW Group’s security measures are breached as a result of third-party action, employee error, malfeasance or otherwise, and, as a result, a third party obtains unauthorised access to trading or other confidential information, the reputation of GPW could be damaged, its business may suffer and the GPW Group could incur significant financial liability. If a breach of the GPW Group’s IT systems security occurs, the market perception of the effectiveness of its security measures could be harmed and could cause market members and clients to either reduce or stop use of its electronic trading platforms. Any events affecting the GPW Group’s image and its credibility could reduce the number of issuers and investors and consequently the GPW Group’s revenue.