Some have a risk some do not

Some mystery exists around risks not recognised by a few but recognised by many. The mystery arises from those who decide NOT to include them as risks.

For instance out of the eight pharmaceutical companies I compared [1], six included the risk of not being able to hire and keep key employees, while two did not, what they use as a heading: ‘Ability or inability to attract’.

Six have similar statements to this:

“The inability to attract and retain highly-skilled personnel could ultimately impact our business or results of operations.”

How come six companies in the same industry consider this a risk and the two others do not? They work in the same industry, they work in the same countries, they have to cope with the same regulations and laws, they have to hire the same profile of employees and yet they do not consider employee hiring and retention as a major risk.

Abbott for instance do not have this as a risk, but in a section called “Information with respect to Abbott’s business in general” they slip in this statement:

“The sustainability of Abbott’s business depends on attracting, engaging and developing talented people with diverse backgrounds …”

So it is not listed as a material risk for Abbott, but it needs to be brought to the attention of the shareholders.

The other is GlaxoSmithKline. They have no employee hiring or retention risk at all. They are able to attract and retain highly-skilled personnel in their headquarters in Brentford, UK, while AstraZeneca cannot retain employees, yet their headquarters is in Cambridge UK only 70 miles away! How odd!

Perhaps GlaxoSmithKline made a mistake omitting it, but I doubt it. In their Key Performance Indicator section, they show one on employees: “Top talent and succession plans for key roles”, which they mark “n/r – Not reported externally due to commercial sensitivities”.  

GlaxoSmithKline are so proud of these plans that first they announce a KPI, then cheekily give no results on it, and second they claim to know with this plan they will not lose their top talent, so no risk. The reader though has to search around for the reason, hidden away in their report.

[1] I analysed the risk statements from the 2021 and 2022 annual reports of eight pharmaceutical companies, four based in USA – Abbott Laboratories, Abbvie Inc, Bristol-Myers Squibb Company, Johnson and Johnson, and four based in the Europe – AstraZenica, GlaxoSmithKline, Sanofi, Novartis.