b'54 Mercia asset Management PLc Annual Report and Accounts 2021Principal risks and uncertainties continuedrisk Possible consequences Mitigationthe group may not be able toThe Group depends on the experience, skillThe Group seeks to reduce this risk by maintaining an entrepreneurial continue to retain or attractand judgement of staff in, amongst otherand inclusive working environment, referred to internallyexperienced, skilled andthings, selecting possible future successfulas #OneMercia.successful Board directors,businesses in which to invest. The Group alsoThe Group offers balanced and competitive remuneration packages to investment professionals anddepends on its network of deal flowall its staff, overseen by the Remuneration Committee, including the support staff. introducers to the managed fund business.potential to receive performance-related bonuses and share options. The Groups future success depends in partThe Committee periodically undertakes benchmarking reviews via on the continued service of these individualsexternal remuneration consultants, the most recent being in December as well as the Groups ability to recruit, retain2020 to monitor and adjust, where appropriate, the Groups overall and motivate additional, talented personnel. remuneration, to remain competitive. Staff welfare has been a high priority during the pandemic and our teams have risen to the challenges presented to them, allowing us to continue to operate and grow. We continue to be successful in recruiting the highest possible quality candidates and the agile working environment in which we operate is another key factor in our successful recruitment and retention of staff.Performance management systems are in place to monitor progress against objectives and development milestones, as well as core values.We have a broad training offering covering core matters, such as regulatory requirements, technical training for investment teams, as well as personal skills development, whilst also focusing on management roles during the financial year to continue to drive high-performing teams.We maintain staff engagement and have continued to do so despite the COVID-19 restrictions, through monthly investment team meetings and a weekly all hands call with our Chief Executive Officer and other members of the Senior Leadership Team.Our annual staff survey results are evaluated by the Senior Leadership Team and any issues or areas of concern, as well as proposals from staff, are escalated to the Executive Team.Mercia has grown a strong pool of talent, reducing the overall impact of any single leaver.tax efficient investments may EIS and SEIS investments may be declared toPrior to any investment, the EIS/SEIS team undertake the necessary fail to meet the criteria forbe outside the regulations and the taxchecks and research and may refer to professional advisers for HMrc clearance, either at theadvantages would be lost for that investmentspecialist qualifying advice. The team then monitor the ongoing outset or on a continuing basis,and Mercia may suffer complaints andeligibility criteria of all EIS investments. due to a lack of internalreputational damage. For proposed VCT investments, due diligence is commissioned at the controls or awareness andVCT investments may be found not to qualifyoutset and prior to actual investment, by the investment team diligence by staff undertakingor may not continue to meet the qualifyingobtaining a report from external VCT tax advisers.such investments, orcriteria, on an ongoing basis, resulting in the responsible for ensuring theentire VCT trust losing its tax status, with aThere is also an ongoing monitoring of all VCT investments to ensure no eligibility criteria are met. consequential impact on investors,investment breaches the qualifying criteria.reputational damage and complaints. Possible risks are further mitigated by the regulatory investment periods for the EIS/SEIS funds raised and the ability to declare special dividends to return money to VCT investors if necessary, to prevent a breach of the VCT investment period rules.Mercias compliance function undertakes internal audit monitoring of investment files to ensure initial due diligence has been undertaken and that advanced assurance clearance has been obtained from HMRC where necessary.'