Risk management

Changing market dynamics

Risk description

TMF Group operates in a global market that is constantly influenced by changes in laws and regulations. If we are unable to develop and market new products or align with these changes, they may have a significant impact on our business and products, and consequently create uncertainty for existing and prospective clients. Failure to comply with changes to laws and regulations may result in reputational damage, criticism, fines, disputes, litigation and a loss of clients and business opportunities.

Controls and mitigations

At TMF Group, we have specialised teams dedicated to closely monitoring, tracking and analysing developments in the regulatory and competitive landscape. This allows us to identify new changes and ensure proactive development of opportunities. These changes are important not only for our own compliance with relevant regulations, but also for our ability to help clients stay compliant. Potential new services are risk assessed with the support of the risk and compliance department. We operate an AI tool that scans relevant global regulatory changes, enhancing our client offering and helping us to manage this risk.

Satisfying client requirements

Risk description

TMF Group's revenue and growth depend on its ability to serve clients. Within this context, we depend on client renewals and expansions, which are, in turn, driven by their satisfaction with our services. As such, any service deterioration that impacts our reputation with a particular client or more widely within our client community is a risk to which we are exposed.

Controls and mitigations

At TMF Group, our client base is diverse, with limited revenue concentration (our largest client represents 2.3% of group revenue). Nevertheless, we have made client care our core value and treat the service we provide to existing clients as the foundation for our growth. As such, we place a strong emphasis on client care in all our communications, particularly the need for prompt corrective action whenever a client issue arises. We periodically measure client satisfaction using net promoter score (NPS) metrics and have implemented an event-driven system for monitoring satisfaction and service quality. We have also appointed specialised client service directors and managers for our largest and most complex relationships, ensuring flawless coordination and day-to-day delivery.

Trade protectionism and geopolitical factors

Risk description

TMF Group is subject to the political and legal dynamics of the countries in which it operates. As a general rule, the performance of TMF Group is typically unaffected by macroeconomic or geopolitical factors, given the critical and recurring nature of the services we provide. Also, most of our clients are already established in the countries in which they seek our assistance and are aware of protectionism and geopolitical risk. Indeed, increasing complexity can increase demand for our services, as it adds to the burden of operating in compliance with the regulations of a given jurisdiction.

Nevertheless, rising protectionism and geopolitical uncertainties in key TMF Group markets may depress macroeconomic performance (GDP growth), affecting levels of client business activity and investment in those locations.

Controls and mitigations

At TMF Group, we monitor our competitive landscape, identifying new threats and opportunities. This includes changes to the macroeconomic, regulatory or political environment that could affect our performance, IT systems and governance. We also encourage companies operating in such jurisdictions to implement simple and effective business practices. We publish our annual Global Business Complexity Index (GBCI), which ranks a significant number of jurisdictions based on the ease with which they can do business, taking into account employment, legal and fiscal rules. The index is available in several languages. We use the index as a platform to encourage governments to take action to improve their ranking.

In 2025, the impact of geopolitical factors on TMF Group's operations was limited.

Technology and innovation risk

Risk description

The technological environment in which TMF Group's services are delivered is changing rapidly. This includes new platforms with enhanced functionality, new tools for digitising and automating manual processes, and more radical innovations using AI. TMF Group continues to adopt this technology because we recognise the risk of not doing so quickly enough, and the risk that modern technologies may reduce the value of our historic business model, which is based on having a local presence staffed by experts.

Controls and mitigations

At TMF Group, we combine transformative and disruptive technological capabilities in our digital strategy to develop new delivery models, improve the client experience, and provide valuable insights to help our clients manage their businesses and investments worldwide.

Our focus remains on developing and investing in the best technologies to serve our clients. This includes evolving our use of technology to provide valuable data insights that go beyond our core service of ensuring compliance in process management. In 2025, the total investment in software, licences and equipment that went live during the year was €74 million, compared to €59 million in 2024.

A key part of our digital transformation is TMF KRAIOS, our next-generation digital client platform, which is changing the way our accounting, tax, company secretarial, entity management and fund administration clients interact with our teams and services, wherever they are on their journey with us. In addition, over 3,600 entities and 160,000 client employees use TMF Optix, our comprehensive portal offering HR administration and payroll services.

At TMF Group, we recognise the significant and transformative potential of AI to enhance our services, streamline operations and deliver value to our stakeholders. Although we currently use AI tools thoughtfully and on a moderate scale, we are committed to exploring innovative solutions that complement human expertise. We are focused on using AI responsibly, ensuring data privacy and security, and creating a meaningful impact, whilst staying aligned with our core values of trust and transparency.

Attract and retain talent

Risk description

TMF Group depends on its ability to retain and attract the key people needed to execute our strategy.

A higher employee turnover rate could increase recruitment and training costs, which could have a materially adverse impact on TMF Group’s compliance status and the quality of services we provide to our clients. At the most basic level, high staff turnover results in poorer client service and weaker compliance with core procedures, such as documentation and filing. It also results in clients having less knowledge and monitoring, which could affect our ability to fulfil our compliance and reporting obligations.

Controls and mitigations

We have made colleague engagement a key performance indicator (KPI) for the One TMF programme. This ensures that we offer a competitive employee value proposition and invest in our colleagues from the moment they join TMF Group and throughout their careers with us. We collaborate with regional delivery centres (RDCs) to provide local teams with scaled, stable support in highly mobile labour markets, where all competitors suffer from high staff turnover.

Cooperation with third parties

Risk description

TMF Group works with and relies on third-party subcontractors, typically where it enters into master service agreements to provide client services in jurisdictions where it does not have a presence. In certain jurisdictions where TMF Group operates, third-party suppliers may be required to provide specific services. Failure by a third party, including joint ventures and suppliers, to deliver services to the agreed specifications could result in our inability to fulfil client requirements, leading to penalties, loss of client contracts and reputational damage.

Controls and mitigations

TMF Group performs due diligence on all potential partners prior to contracting, to ensure robust compliance, financial and operational resilience, and their alignment with TMF Group standards. Our Outsourcing framework provides for ongoing monitoring to ensure the quality of sub-contractors or third party suppliers and the quality of services delivered to our clients.

Compliance with laws and regulations

Risk description

Significant changes to the regulatory environment of TMF Group, including legislative or market changes, and our potential inability to successfully adapt to these changes, could have a material adverse effect on our business. Furthermore, we are subject to regulatory and compliance obligations, as well as reporting obligations, and we provide a number of services that are regulated in certain jurisdictions and require licences to operate. A regulatory sanction or loss of licence could have a significant financial and reputational impact.

Controls and mitigations

TMF Group has a dedicated compliance, legal and risk function, comprising specialists who closely monitor, track and analyse regulatory landscape developments to identify changes. Any new laws and regulations, or changes to existing legislation and their impact on TMF Group are shared and assessed proactively. These changes are also included in policies, procedures and (compulsory) training programmes. Where and when required, we review and adjust our processes, services, products and business to ensure compliance with laws and regulations. TMF Group companies will comply with whichever is higher: local regulatory and legislative requirements or TMF Group compliance policies.

We manage risk through our three lines of defence model. Firstly, we expect practices and markets to act appropriately. Secondly, if necessary, we carry out remedial work to address any issues. Thirdly, we continually invest in our risk management infrastructure, including our global Know Your Customer (KYC) function, ISO/ISAE quality certification and compliance monitoring.

Onboarding and monitoring our portfolio of clients

Risk description

TMF Group’s ability to provide services to clients depends on its compliance with local laws and regulations, as well as international recommendations and sanctions. Breaching this regulatory framework could expose TMF Group to significant financial loss, regulatory or legal sanctions (including potential licence suspension or revocation) and reputational damage.

Controls and mitigations

At TMF Group, we have a robust regulatory compliance framework comprising policies and procedures, including KYC, anti-money laundering (AML) and countering the financing of terrorism (CFT) requirements. These requirements are regularly enhanced to adapt to changes in our clients' regulatory environments. Specific local laws in the locations in which we operate are integrated into the policies and procedures for those locations. We regularly reassess our compliance tooling environment to ensure it aligns with the latest AML/CFT obligations. We take a risk-based approach to onboarding and ongoing screening of our clients, as well as reassessing client mandates. All staff and third parties, including subcontractors and joint ventures over which TMF Group has operational control, must operate in accordance with our regulatory compliance framework. Global communication and mandatory training programmes are in place to increase compliance awareness.

Monitoring of client transactions

Risk description

TMF Group’s obligation to comply with local laws, regulations, international recommendations and sanctions goes beyond merely identifying clients and beneficial owners. Our compliance obligation also relates to the activities of our clients, and is combined with TMF Group's capacity to be its clients' compliance partner. Any transaction that appears suspicious in terms of the regulatory environment or the client’s profile must be assessed. Breaching this obligation could expose TMF Group to significant financial loss, regulatory or legal sanctions (including potential loss of our licence to operate), as well as reputational damage.

Controls and mitigations

We have robust transaction monitoring procedures in place, and these are referenced in our regulatory compliance framework. Where specific local laws impose particular requirements, these are incorporated into the policies and procedures for those locations.

We regularly review our transaction monitoring approach to ensure it aligns with local requirements and the services we provide. This allows us to assess how local changes and service specifics can enhance our transaction monitoring process. Transaction monitoring is a key element of our global communication and mandatory training programmes.

Data privacy

Risk description

Breaching data privacy regulations or experiencing a data breach could expose TMF Group to significant financial losses, regulatory or legal sanctions (including the potential loss of our licence to operate), and reputational damage.

Controls and mitigations

We have a robust data protection compliance framework with binding corporate rules. Local data privacy regulations and their implementation are monitored closely, as are enhancements and changes, and the TMF Group data privacy framework is updated accordingly. All employees, as well as third parties, including subcontractors and joint ventures where TMF Group has operational control, are required to operate in accordance with the binding corporate rules under the TMF Group supplier code of conduct and data privacy policy. This is a key consideration when selecting a subcontractor. We also have global communication and mandatory training programmes in place to increase compliance awareness. The Group General Counsel and the group privacy office centrally manage all global data protection compliance, together with a network of data protection and compliance experts, as well as legal counsels in the markets in which TMF Group operates. Adherence to the binding corporate rules is audited at regular intervals by the internal audit department.

Non-compliance with the company’s principles and values

Risk description

Unethical and/or fraudulent activities carried out by our employees, clients or third parties could result in significant financial losses for TMF Group, as well as regulatory or legal sanctions (including the potential loss of our operating licence) and reputational damage.

Controls and mitigations

We have a robust regulatory and operational control framework, underpinned by an overarching code of conduct. The company maintains a 'zero tolerance' policy towards any employee who knowingly breaches any laws or regulations. Such actions are reported to the board and may result in disciplinary action, including dismissal. All employees, as well as third parties including subcontractors and joint ventures where TMF Group has operational control, are required to adhere to the TMF Group code of conduct and the TMF Group supplier code of conduct in particular. We have global communication and mandatory training programmes in place to increase awareness of compliance. TMF Group companies will comply with whichever is higher: local regulatory and legislative requirements or TMF Group compliance policies.

Legal claims

Risk description

Current, potential and pending legal or administrative proceedings may have an adverse effect on TMF Group. Such proceedings may be initiated against TMF Group, and any resulting judgements, settlements or orders rendered by the relevant authorities may increase during periods of economic downturn.

Controls and mitigations

TMF Group has a global legal function comprising experienced legal counsellors, both centrally and at market level. These counsellors work together to manage this risk. TMF Group has compliance and operating policies, client acceptance procedures and strict contracting procedures in place to limit possible exposure when accepting clients. The group also has strict reporting and management policies and procedures in place. Claims and litigation are managed centrally by the Group General Counsel, in conjunction with legal counsels from the relevant markets, external counsels and other relevant stakeholders. Every case is reviewed and evaluated, and if necessary, provided for. TMF Group maintains appropriate insurance.

Legal responsibility management

Risk description

A client’s contractual framework may have an adverse effect on TMF Group. Failure to comply with TMF Group's standard contractual terms (terms of reference) may result in TMF Group assuming excessive responsibility and/or restrict our ability to terminate a business relationship that exceeds our risk appetite.

Controls and mitigations

TMF Group has a global legal function with experienced legal counsellors, both centrally and at market level. These counsellors work together to manage this risk. The group has terms of reference and an escalation route for deviations in place to ensure centralisation and comprehensive monitoring of any such occurrences. Legal counsellors have specific expertise relating to the types of transactions for which TMF Group provides services, ensuring a thorough understanding of its obligations and responsibilities.

Exchange control restrictions

Risk description

Restrictions on foreign investment and foreign-denominated financing, including exchange control restrictions or other restrictions regarding the repatriation of funds from certain countries in which TMF Group operates, including regulatory capital restrictions, could hinder our ability to invest abroad and obtain foreign-denominated financing.

Controls and mitigations

TMF Group regularly repatriates cash to avoid high balances accumulating in local offices. With the exception of Russia, we currently face no restrictions on repatriating cash from local offices, although certain countries only permit delayed repatriation via dividends. We are required to maintain specified levels of local liquidity in certain regulated jurisdictions, amounting to €5.3m across all jurisdictions as of 31 December 2025, compared with €3.7m at the end of 2024. 

Foreign currency exchange risk

Risk description

As an international company, TMF Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar and related currencies. In several markets, client contracts are denominated in euros or US dollars, even though these are not the functional currencies in these markets. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities, and investments in foreign operations.

Controls and mitigations

Currency exposure arising from TMF Group's foreign operations is primarily managed by limiting net assets in these operations where possible. Furthermore, we aim to invoice revenue in local currency wherever possible, in order to align with the cost base. No further hedging of foreign exchange risk takes place. A 5% strengthening or weakening of the euro against the US dollar on 31 December 2025, with all other variables held constant, would have resulted in a net decrease or increase of €3.2m, respectively. The comparable impact on 31 December 2024 was €9.9m.

Interest rate risk

Risk description

Interest rate risk refers to the possibility that unexpected changes in interest rates will negatively impact the results, cash flows and equity of TMF Group.

Controls and mitigations

As part of our policy, TMF Group seeks to mitigate the effects of interest rate volatility on our results, cash flows and balance sheet, provided these effects remain within certain boundaries. Our interest rate risk primarily stems from long-term borrowings. As of 31 December 2025, 63% of the interest on external borrowings in euros (compared to 76% in 2024) and 57% of the interest on external borrowings in US dollars (compared to 70% in 2024) was hedged. The remainder of the interest is variable and linked to Euribor and USD TERM SOFR CME.

A sensitivity analysis indicates that, at 31 December 2025, a 100-basis-point increase in market interest rates, with all other variables held constant, would have resulted in a decrease in net profit of €14.6m (compared to €2.2m in 2024). Conversely, a 100-basis-point decrease in market interest rates would have resulted in an increase in net profit of €15.8m (compared to €7.5m in 2024).

Inaccurate sales forecasting risk

Risk description

TMF Group makes estimates and assumptions regarding new client targets and revenue generation for the year, which are included in its budget. Inconsistencies and overvalued expectations may impact TMF Group’s ability to maintain results that align with its budget, which could affect investor confidence in future innovation and development investments.

Controls and mitigations

At TMF Group, our experienced business development team works closely with the group finance team, reporting to the Chief Financial Officer. The business development team has extensive knowledge of local markets and opportunities. With the support of the group finance team, a risk-based approach is adopted to avoid overvalued expectations. Business development expectations are reviewed on an ongoing basis and shared with the board.

Accounting estimate risk

Risk description

TMF Group makes financial estimates and assumptions for the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. The critical accounting estimates and assumptions that may affect reported amounts of assets, liabilities income and expenses within the next financial year are:

• Impairment of goodwill

Controls and mitigations

We have an experienced finance team reporting to the Chief Financial Officer. This team is primarily responsible for proposing material accounting estimates, which the audit committee then approves. TMF Group also uses input from other departments where required. We have summarised our accounting policies in a digital accounting manual.

Estimates and the underlying assumptions are reviewed on an ongoing basis and represent management's best estimate.

Acquire new businesses

Risk description

Since its formation in 1988, TMF Group has grown significantly through acquisitions. Going forward, acquisitions will continue to drive growth as we identify businesses that enhance our client capabilities, align with our strategy, and fit our culture. However, potential uncertainties in the availability of suitable acquisition targets could prevent TMF Group from achieving the inorganic growth component of our strategic objectives. Alternatively, poor experience with candidate firm selection could undermine our investors’ confidence in our ability to acquire businesses successfully.

Controls and mitigations

Our mergers and acquisition (M&A) team has significant experience in scanning the market for potential acquisition candidates and managing the M&A process. We select businesses with great care to ensure a cultural fit with TMF Group, and only acquire businesses in parts of TMF Group that are well positioned to support their integration.

In 2025, TMF Group acquired and successfully integrated six new businesses. Two of these were in Europe, one in the Asia Pacific region and three in the Americas.

Integrate new businesses

Risk description

The continuous growth of TMF Group through acquisition could lead to uncertainties regarding the successful integration into the organisation. This could result in our inability to fulfil our compliance and governance expectations, ensure full client identification and ongoing monitoring, and complete our reporting obligations. It could also result in TMF Group being unable to provide our clients with the quality of service they expect.

Controls and mitigations

We select businesses that fit with our compliance and cultural environment. We also have an integration team in place to incorporate new acquisitions into the business. This team works closely with the local market delivery and risk and compliance departments.