STRATEGIC REPORT PRINCIPAL RISK SUMMARY S STRATEGIC RISKS CLIMATE CHANGE RISKS TR A Macroeconomic and Brand / reputational Technological Climate TE political instability damage advancement change G I C R Exposure to multiple political and Our brand and reputation are critical It is essential to maintain pace with The impact of climate change could R I S economic factors could impact in securing demand for our vehicles technological development to meet significantly impact demand for our E K customer demand or affect the and in developing additional revenue evolving customer expectations, vehicles, our ability to sell within P DE O markets in which we operate. streams. remain competitive and stay ahead of certain markets or have financial R S regulatory requirements. consequences through increased T C carbon pricing, taxes and other R regulatory restrictions on ICE I P T vehicles. G I O ON Risk movement Risk appetite Risk movement Risk appetite Risk movement Risk appetite Risk movement Risk appetite VE MODERATE LOW LOW LOW R Link to strategy Link to strategy Link to strategy Link to strategy NAN 1   2   3   1   2   3   2   3   4   1   2   3   4   C E P – Global economic slowdown – Product recall or quality issues – The Group is reliant on strategic Transition risks O reducing demand for vehicles could impact customer confidence partnerships with third parties to – Policy – new tailpipe emissions T – Unfavourable movement in and result in reduced demand support development of new and reduction targets or loss of small F E I N exchange rates increasing – Late delivery of new models / emerging technologies volume derogation status could NAN T input costs or affecting price variants could impact customer – Competitors may have better lead to increased carbon taxes and I A competitiveness confidence and loyalty and delay access to funding to develop new import tariffs C L I – Adverse economic global sales technology faster and be first to – Market – customer preferences IAL M conditions could adversely impact – Dealer network may not be market may move towards non-ICE S P A our dealer network or supply effective in raising, maintaining and – Changing and more stringent powertrain options faster than T C chain promoting brand awareness regulations may make current anticipated A T O – Commodity price increases and – Inadequate dealer training in new technology obsolete and increase – Technology – disruption from T E N B other inflationary pressure products and technologies could the risk of future non-compliance new technologies or new market M – Increasing interest rates impair the customer experience – Failure to incorporate new entrants together with increased E U impacting the affordability of – A slower transition to alternative technology into vehicles may affect demand for sustainable products N T S finance for customers powertrain vehicles could affect our ability to remain competitive – Reputation – inability to create a S I N the Group’s ability to target new credible sustainability proposition E customer groups as we manage the transition from S S ICE to EV powertrains, or brand F damage caused by activist activity U R Physical risks T – Increased frequency / severity of H E extreme weather events causing R supply chain disruption INF – Potential increased insurance costs as more claims are made due to OR climate-related physical damage / M business disruption A T I R – Regular operational and financial – Standardised embedded quality – Strategic arrangements with key – Progress on activities supporting ON I S reviews of the business procedures (e.g., 300 Call partners, including the strategic our Racing. Green. sustainability K – £216m proceeds from August Procedure, Customer Perception supply agreement with Lucid strategy and ongoing oversight M 2023 Share Offering Audit, Parts Approval Process) to and the Strategic Co-operation by the Board Sustainability ITI – Business plan developed maintain focus on vehicle quality Agreement with Mercedes-Benz Committee G taking account of current – Expanded dealer network and AG, to provide powertrain and – Strategic co-operation A macroeconomic environment improved training to ensure delivery electrical architecture agreements in place with various TI – Monitoring global market trends of a luxury customer experience – Development of commodity suppliers providing access to new O to target areas for future growth – Regional marketing plans strategy plans powertrain technology N – Routine monitoring of dealer developed quarterly to drive sales – Investment in Electrical Engineering – Investment in R&D to develop stock levels to support build-to- pipeline team PHEV and BEV powertrain order strategy – Fixed marketing investment – Development of new interiors capabilities to support delivery of – Dealer network development programme to drive increased for new sports cars commencing electrified powertrains strategy to target growth in brand awareness and salience, with DB12 in 2023 and Vantage in – Investment in R&D to reduce emerging markets including sponsorship of the Aston early 2024 average fleet GHG emissions Martin Aramco Formula One® Team – Establishment of Connected Car – Forward purchase / pooling of – Quality-led production ramp up for team to develop stronger customer carbon credits to reduce exposure new vehicle programmes proposition for in-car technology to carbon-related financial – Opening of the Q New York Flagship – Creation of an Innovation and penalties and taxes and carbon brand store in June 2023 Advanced Technology group with offsetting dedicated budget and process to – Sourcing of 100% renewable advance innovative technology electricity for our manufacturing in advance of programme operations requirements – Committing to the SBTi to establish and track GHG reduction targets to establish a credible roadmap to net-zero in our manufacturing facilities by 2030 and our supply LEGEND chain by 2039 – Setting target to increase 1 Brand  2 Product innovation  3 Sustainability  4 Team biodiversity at our operations. – Setting annual 2.5% reduction in Scope 1 emissions targets ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023 66