Business review
Experian: risks and uncertainties
The management team at Experian has identified the following factors as major potential risks to the successful performance of its business. Some, such as data security, are specific risks that require specific, identified actions to mitigate their effect. Others, such as the impact of competition, are areas addressed through strategic planning and operational management processes.
Data security
Unauthorised or fraudulent access to consumer credit data directly from Experian systems or employees or from third parties is a risk, as is the loss or potential misuse of consumer data. To address this, Experian has very rigorous information security policies and procedures which are embedded within the operations. Compliance reviews are continuous and internal audits are conducted regularly. To address the risk of unauthorised access by third parties, Experian also screens new third parties carefully and internal audit performs targeted audits. The loss and/or potential misuse of consumer data is addressed through continued investment in IT security and greater use of data encryption around the world.
Competition in the credit reporting industry
Experian’s US business primarily competes with two national consumer credit reporting companies and one national business credit reporting company, which offer credit reporting products that are similar to those of Experian. Experian believes that the principal competitive factors affecting it are price, product quality, customer service and technological innovation.
Client consolidation
There is a risk that if clients consolidate there could be a resulting price compression which would negatively affect Experian.
Lawsuits
In the US, class action lawsuits continue to be a significant feature of business life. For Experian, the need to defend its position may require increasing legal expense and attention of management.
Information systems
Information systems are fundamental to Experian which therefore protects its data centres against damage from fire, power loss, telecommunications failure, natural disaster, hardware or software malfunction, computer viruses or other purposeful interference. Off-site copies of all information contained in databases are maintained and Experian runs back up data centres.
