Risk management

There are inherent risks in Accell Group’s business activities and organisation. Accell Group may fail to meet strategic, operational and financial objectives in full and the company also faces risks in the field of financial reporting and the application of laws and regulations. The extent to which the company is willing to run these risks in trying to achieve its goals differs per risk category. Accell Group has a relatively high risk appetite with respect to innovation, development and marketing. At the same time, the company has a low risk appetite on the product safety front. Where possible, Accell Group has transferred the risks it is unwilling to take on independently to an insurance company. The management of risk is an important part of the tasks of the company’s management, the aim being to have a positive impact on the extent to which the company realises its objectives. Below you will find an explanation how Accell Group has organised its risk management and the main risks the company faces.

Risk management system

The risk management system comprises the following components:

  • identifying and weighing the risks associated with the various strategic alternatives and formulating realistic objectives and related control mechanisms;
  • identifying and evaluating the main strategic, operational, financial and compliance risks and the potential impact of same on the company;
  • developing a coherent system of measures to control, limit, avoid or transfer risks. The risk management system is tailored to the size and decentralised structure of the company.

Despite the risk management and control system, material errors, fraud or illegal acts may occur. The system therefore does not provide absolute certainty that objectives will be realised, but was developed to achieve a reasonable level of assurance with regard to the effectiveness of internal controls pertaining to financial and operational risks that may affect the organisation’s objectives.


The Board of Directors takes stock of and analyses the risks associated with the strategy and activities of the company and its associated enterprise. The Board determines the risk appetite and decides which measures to introduce to mitigate risks. Based on the risk analysis, the Board of Directors implements and maintains suitable internal risk management and control systems. Where relevant, these systems are integrated in Accell Group’s operating processes and are known to those for whose work they are relevant. The Board of Directors monitors the operation of the internal risk management and control systems. This monitoring covers all material control measures geared towards strategic, operational, financial and compliance risks. The Board of Directors discusses the risk management with the audit committee.

Market and operational risk management is organised at operating company level, while the organisation of the supply chain and HRM is increasingly managed at group level.  Management and control measures related to acquisitions, treasury, financial reporting, tax and legal issues are centralised at group level. Accell Group has a decentralised management philosophy, in which local targets are determined in consultation between the Board of Directors and the management of the operating companies. The company monitors progress through the financial planning cycle and management information, the risk analysis and regular visits by the Board of Directors and other group-level employees to the operating companies.

Risk analysis

The Board of Directors and the management of the operating companies periodically draw up analyses of the strategic, operational, financial and compliance risks. For the purposes of the risk analysis, Accell Group conducts a detailed inventory of internal and external risks which the members of the Board of Directors and the management of the subsidiaries assess individually in terms of their potential impact on the company. The company also assesses the control measures related to the main risks. The aim of the Board of Directors is to continuously assess the system and make any necessary improvements. The Board of Directors periodically discusses the main risks with the Supervisory Board.

Financial planning cycle and management information

The various operating companies draw up strategic plans each year based on the main developments in the company’s operating environment. Once harmonised and approved, these plans are translated into annual budgets. The Board of Directors discusses the consolidated strategic plan and budget with the Supervisory Board. Management information reports are compiled on a daily, weekly and monthly basis. Prognoses are drawn up at least three times a year. The actual results are reviewed and compared to budgets and prognoses on a monthly basis and the outcome is reported to the Board of Directors.

Internal risk management and control system

To safeguard the quality of the company’s financial reporting and operational controls, Accell Group works with a clear administrative organisation and internal controls. The internal control system is largely embedded in the company’s information systems.

Risk management manual

In 2015, Accell Group drew up a risk management manual, which devotes attention to the risk management system and the organisation, as well as to risk identification, risk assessment and plans of action. This manual will be amended in 2018 following the review of the risk management system.

Financial administration guidelines

Financial department staff are provided with guidelines and instructions pertaining to the structure and maintenance of the financial administration and reporting systems. Details of these are provided in a reference document. The guidelines and instructions comply with prevailing IFRS standards.

Internal auditing

The internal auditor carries out his tasks on the basis of a detailed internal audit plan, a predetermined assessment framework and the Accell Group Internal Control Framework. The Accell Group Internal Control Framework outlines the inherent risks for each process and the related internal control measures. The internal audit generates findings and recommendations that are used to reinforce the internal controls. The findings and recommendations are shared with the members of the Board of Directors and are subject to fixed follow-up deadlines. It has been agreed with the Supervisory Board’s audit committee that the internal auditor reports any high-priority findings directly to the committee. This also applies to the follow-up on previous high-priority findings. The follow-up on high-priority findings is a regular item on the agenda of the audit committee meetings.

The Accell Group Internal Control Framework also includes embedded internal procedures, guidelines and management regulations that could have a financial impact. The company has drawn up management regulations to involve the Board of Directors in important decentralised decisions and for it to approve such decisions, frequently in writing.

In recent years, the company has conducted internal audits at various Accell Group subsidiaries and devoted attention to group-wide control measures. The subject of fraud is discussed with the local management, as well as in regular consultations with the CFO, as part of the internal audit plan. The subject of fraud risk management is an item on the agenda of the controllers meeting and in consultations between the Board of Directors and the Supervisory Board. This helps to bring the responsibility for the prevention and detection of fraud risk to the attention of local management and to share this responsibility with them.

In 2018, the company will continue to develop the Accell Group Internal Control Framework and its group-wide control measures. Data analysis is used as a control tool within Accell Group’s internal audit department. The aim is to use data analysis for continuous monitoring, with a view to obtaining indicators from IT systems, processes and control measures, which are collated, checked and monitored on a regular basis. The internal auditor will also review the risk management system and facilitate the 2018 risk analysis. In addition to the previously mentioned regular internal audits, the Board of Directors or the audit committee can request specific ad-hoc audits. In 2017, the company decided to add two members to the internal audit department. Accell group expects to fill these positions in 2018. 

External auditor

The external auditor draws up an annual audit plan. In the context of the audit of the financial statements, the external auditor conducts an assessment of the structure and presence of the most important internal controls of the business processes. The external auditor reports the outcome of this assessment in a formal management letter. The most important findings are discussed with the plenary Board of Directors and also with the Supervisory Board’s audit committee (partly in the absence of the Board of Directors).

Letter of Representation

Each year, the directors of subsidiaries sign a Letter of Representation, a detailed statement pertaining financial annual reports and the presence and functioning of the internal control systems. For this detailed statement, the company has drawn up a checklist of subjects that is also signed annually by other members of the management of the Accell Group subsidiaries.


Sparta R5TE

Award: Good Industrial Design 2017

Sparta's R5Te is an electric touring bike in which the five gears and the motor have been integrated into the back wheel. This sports bike is fitted with hydraulic disc brakes and has a rubber belt instead of a chain, which prevents stains on the rider's clothing. The removable battery is half-integrated into the bike's frame and can be charged at home.


Other risk management measures:

  • Accell has an internal code of conduct, which was updated by the Board of Directors of Accell Group and approved by the Supervisory Board in 2013. This internal code of conduct applies to all Accell Group employees and is available on the Accell Group corporate website;
  • The basic rules for the directors of Accell Group’s operating companies have been laid down in management regulations. These include detailed regulations related to internal decision-making and communications;
  • Accell has a whistle-blower regulation, which was updated and adopted by the Board of Directors of Accell Group and approved by the Supervisory Board in 2017, following changes in legislation in Netherlands. The whistle-blower regulation has been published on the Accell Group corporate website and ensures that any violations of existing policy and procedures can be reported without any negative consequences for the person reporting the violation;
  • In 2015, the company implemented an earlier decision to organise the supply chain at group level, to give the company more control of the availability of products for sale, and to reduce working capital, especially in inventories. To this end, in 2015 the company added a Chief Supply Chain Officer (CSCO) to the Board of Directors and has since set up a department with some 20 employees.

Main risks and mitigation of these risks

The results of Accell Group are affected by the general economic conditions and the economic outlook of the countries in which the company is active. The conditions in the key purchasing markets also play a role. We divide the risks into the following categories: strategic, operational, financial and compliance risks. Social and environmental risks have been integrated in these categories with a view to integrated reporting. Following overview is not an exhaustive list of risks to which the company is exposed. Additionally, some risks are listed only once, while they may fit into various risk categories.

Strategic risks


The bicycle purchasing behaviour of consumers and the role of the specialist retail trade have changed dramatically in recent years. Many products are now also available online. There is a risk of channel competition. In addition, society is moving in the direction of circular enterprise, with the key trends a shift towards possession rather than use and the use of sustainable materials.


Mitigation of the risk

Accell Group devotes considerable attention to market positioning and innovation to inspire consumer preferences for our products. Accell wants to ensure that its products are available via all outlets, both offline and online, where consumers want to make their purchases or close their rental or user agreement. Retail trade can play a service role on this front. Accell Group’s refined strategy has a strong focus on this front. Accell Group is tightening its IT policy to increase the focus on consumer services and consumer data.

We also devote attention to the end-of-life stage of our bicycles, for instance by setting up collection systems for used batteries.



Accell Group’s strategy is partly dependent on acquisitions. However, it is possible that acquisitions may fail to meet expectations and the goals set. This pertains to estimates and assessments made during the acquisition process, as well as to integration following the acquisition. Furthermore, it is possible that Accell Group will not be able to execute its acquisition strategy because it fails to acquire sufficient suitable companies.


Mitigation of the risk

Accell Group uses its extensive internal knowledge and experience, as well as external experts. The Board of Directors is always directly involved in an acquisition. The Supervisory Board is an active partner in the acquisition process and must approve acquisitions.

Some acquisitions require the approval of the company’s consortium of banks.

New companies are generally integrated into the group in the short term. Accell is constantly on the look-out for and in touch with potential acquisition candidates.

The changing conditions in the worldwide economy and changing financing opportunities may make it more difficult or even impossible to finance acquisitions. Buyers with greater capital resources may be at an advantage in those situations.



Operational risks


Accell Group’s brand strategy demands continuous innovation and development of attractive products, partly driven by developments at its competitors. Accell Group also has to meet this challenge in the long term. There is a risk that Accell Group will fail to develop and market sufficiently innovative products. Potential changes in consumer awareness of brands and products also play a role in this.


Mitigation of the risk

Accell Group continuously invests in the development of its brands and products. The availability of talented and motivated managers and staff is a key factor in this respect. Accell Group periodically assesses the management teams of the companies.



Strong leadership is required to successfully execute the company’s strategy. This makes a lack of sufficient leadership qualities and a lack of focus a risk to the implementation of the strategy.


Mitigation of the risk

To enable the management of Accell Group to implement the strategy effectively, and overcome the related strategic and operational challenges, we will:

  • Recruit with a more intensive focus on strategic capabilities (such as planning, procurement, IT, marketing, innovation and project management).
  • Conduct and follow up on the Accell employee engagement survey.
  • Introduce the 'Accell Talent Review' programme to create personal development plans and intervene on an individual basis where necessary.
  • Adjust the short-term bonus scheme for seniormanagement, by making a clear connection between the performance of Accell Group and local and personal successes.



The bicycle sector is marked by fierce competition between existing providers and the chance that new providers and sector-related products can enter the market at any time. There is a risk that Accell Group is unable to predict the behaviour of (potential) competitors sufficiently or unable to respond effectively to same. Sales via different channels may lead to pricing differences. There is a risk that Accell Group brands may lose markets due to a lack of options on the product pricing front.


Mitigation of the risk

Accell Group invests a great deal of time and money in market research, the outcome of which is used in the decision-making process.



Turnover is highly sensitive to seasonal influences. Bicycles are sold primarily in the spring and summer. There is a risk that the company will not be able to adapt quickly enough, which could put pressure on timely deliveries. The weather may also affect seasonal sales. Poor weather in the spring and/or particularly hot or bad weather in the summer may have a negative impact on the demand for bicycles. This may result in surplus stock at the end of the season, which then needs to be sold at a discount.


Mitigation of the risk

Accell Group uses seasonal production and sales plans and aims to continuously improve the predictability of its sales. Long supply lines combined with the unpredictability of the weather and sales can result in higher inventory levels. The company therefore aims to be as flexible as possible in its response to changes in supply and demand during the season. An annual collection is less important in online sales. Product innovations can be introduced throughout the entire season.

The introduction of a supply chain organisation at Group level enables more effective control of the planning, which in turn increases availability and helps prevent the build-up of surplus inventories. Accell Group does not use hedging products to cover the impact of the weather.


Compliance risks


Defects in products may result in injury to and claims from end users. These can result in physical injury to the consumer on the one hand, and financial damage and/or damage to the company’s reputation on the other. People’s growing awareness of their rights as consumers is a key development in this respect.


Mitigation of the risk

The company takes great care to ensure the quality and safety of its products. This includes the use of standards based in part on laws and regulations, test and control systems and recall scenarios. Accell Group has a low level risk appetite on the product safety front. In addition, Accell Group maintains close contacts with government bodies and advocacy groups to safeguard and improve the safety of bicycles.



Imports of bicycle components from outside Europe and the United States are subject to various types of duty. These include a general import duty (5-15%), on which certain countries enjoy a discount. In addition, imports of bicycles from China to Europe are subject to anti-dumping duties. The current duty for imports from China is 48.5%. This regulation also applies to imports of specific bicycle components from China, to prevent the import of near-complete bicycles in the guise of components. The main purpose of the regulations is to prevent the import of complete bicycles at unfair price levels. The absence of such duties, or a substantial change to the level of the duty, could result in changes to the supply and demand structure in European bicycle markets.


Mitigation of the risk

Bicycle manufacturers that import components for in-house assembly are exempt from this duty. All the Accell Group production companies in Europe are exempt.

Accell Group positions its bicycle range in the higher market segment. In terms of strategic positioning in this segment, quality and the speed of a company’s response to market developments are key factors. The share of assembly costs in the total cost price of bicycles in the higher segment is limited. This reduces the impact of a potential termination or substantial reduction of the import duty.



Components are largely produced in Asian countries. The fact that these countries differ from us in terms of how they view of social and environmental aspects entails a risk of damage to the company’s reputation.


Mitigation of the risk

Suppliers must sign Accell Group’s Code of Conduct. We also audit our primary suppliers in terms of social and environmental aspects in accordance with an audit system developed by the bicycle industry.


Financial risks


The company’s turnover, profit and cash flow are subject to exchange rate fluctuations in (partly) non-functional currencies. This pertains primarily the US dollar and to a lesser extent the Japanese yen, the British pound, the Taiwanese dollar and the Chinese yuan. Changes in interest rates also affect the company’s results and cash flow.


Mitigation of the risk

Accell Group seeks to minimise the impact of non-functional currencies and controls the transaction risk by using derivatives to cover its currency needs. All derivatives used have an underlying economic basis. This principle is applied strictly to prevent potentially speculative positions. Accell Group has an active interest rate policy, partly through the use of interest rate swaps.



The company is partly financed via a bank facility, which is used to absorb the impact of seasonal fluctuations in working capital, or to finance (smaller) acquisitions. There is a risk that the company will not be able to obtain the required financial resources, or will be unable to obtain those resources on time, to meet its financial obligations, which may endanger the growth of the company.


Mitigation of the risk

Accell Group mitigates this risk with a committed group financing facility, which has been agreed with a number of solid financing parties. The facility is in line with the characteristics of the company and provides the financing parties with sufficient transparency and security. The conditions of the committed facility are explained in more detail in the financial statements (section 5.6, point 3) of this annual report.


Improvements planned for 2018

Accell Group’s risk management system is embedded in the organisation and the company has continued to extend and improve the system in recent years. The company has scheduled the following actions and/or improvements for 2018:

  • A review of the risk management system as a result of the previously announced changes to the organisation related to the refined group strategy;
  • Re-evaluation of the main risks, using input from the operating companies, the Board of Directors and the Supervisory Board to assess whether the currently identified risks and associated risk appetite are still fit for purpose;
  • A more explicit definition of the company’s risk appetite; 
  • Further integration of the risks related to sustainability, with specific attention for both the human and environmental aspects of same;
  • Involving the audit function in the assessment of the follow-up to control measures and the assessment of risks.
  • Improving the structure and effectiveness of control processes related to the determination and payment of import duties.