Deterioration in economic conditions and a change to the terms of conventional international trade and embargoing of specific customers may lead to a reduction in the level of demand for Spirent's products and services and cause customers to delay their purchasing decisions.

The Group closely monitors both market and geographic trends in order to respond to changes in demand and be in a position to take timely actions to protect profitability where possible.

In addition, Spirent has a large number of geographically diverse customers, which may mitigate the impact of issues in any one area.

If product development investment does not keep pace with the speed of change in technologies, or if it is not directed at the right key areas, our competitive position and financial performance will suffer.

If Spirent's solutions take longer to develop than anticipated or longer to develop than our competitors, then our competitive position and financial performance will also suffer.

Changes in technologies may lead to a short-term pause by our customers investing in our solutions.

Intellectual property claims can result in significant defence costs and may affect Spirent's ability to market its products.

Customers may choose to use open-source tools instead of some Spirent products to meet part of their testing needs.

All Spirent's businesses work very closely with customers and remain focused on their requirements.

Each business makes investment decisions specifically related

to its solutions portfolio based on market needs.

Spirent continues to focus its investment into areas that offer the most potential for sustainable earnings growth. In 2021 the product development investment was $113.3 million (2020 $103.1 million).

Spirent has active intellectual property protection programmes in place to obtain appropriate protection in a cost-effective manner.

A significant natural disaster or global pandemic could disrupt the Group's ability to conduct business and adversely impact revenue and operating results.

Higher peak and average temperatures could lead to increased capital expenditure to expand or upgrade cooling equipment across multiple Spirent sites.

The shift towards renewables and away from fossil fuels may result in associated increased costs. Starting in the short term, energy costs are likely to increase due to higher investment requirements in low carbon technology and expected additional carbon-related levies. We also expect additional administrative burden on the business, likely increasing the costs for resource to deliver and report. We do not estimate the impact to be material to Spirent.

In the medium to long term, our TCFD climate-related analysis has highlighted the risks of site damage to building and infrastructure, lost time and productivity and any associated increased cost of insurance. Additionally, a major supplier disruption event is a possible key risk, causing an outage for a period of time which we assess as causing possible delays to customer shipments and the timing of revenue recognition. Disruption, financial problems of contract manufacturers or limitations in their manufacturing capacity could limit supply and/or increase cost.

The ongoing semi-conductor supply chain shortage could lead to further disruption to the delivery of hardware to customers and further supply chain cost increases in 2022.

Failed internal and external processes, systems or human error could lead to compliance issues.

If a cyber-attack were to be successful it could result in loss of data and confidential information and damage to Spirent's intellectual property, causing major disruption to the business. Any security vulnerabilities in our products could also adversely impact our customers. There would also be a potential impact on Spirent's credibility in the security market.

An important component of Spirent's corporate governance is its risk management strategy. IT disaster recovery plans are in place for all core business systems and ensure that the wider operations are all fully covered. In 2021, we performed the annual refresh and test of the Group Business Continuity and Disaster Recovery Policy and Procedure.

Spirent has mitigation plans for each of the TCFD physical risks identified, that have been developed as part of longstanding business continuity and disaster recovery plans. Spirent engineering centres are situated across the globe allowing flexibility and agility should one site become affected. Where possible we have second source component supply to assist with the mitigation of interruptions in supply and regular meetings are held with contract manufacturers. In addition, the Group's largest manufacturing subcontractor has multiple worldwide sites and comprehensive business continuity plans.

The Group has appropriate business interruption insurance in place.

We are working closely with our contract manufacturers and are in frequent direct consultation with key component suppliers worldwide to mitigate the impact of the ongoing semi-conductor supply chain challenges. The situation is dynamic and we will take appropriate action to mitigate the supply chain risk including the careful management of planning and fulfilment.

During 2021, we continued with a programme of work to enhance processes and procedures in the area of cybersecurity. Third party providers are used in both the testing and monitoring of our security profile.

Loss of one or more of Spirent's major customers could have a significant impact on Spirent's financial results.

Spend on Spirent's products is often capital in nature and so customer spend can fluctuate significantly from year-to-year.

Significant failings in either quality or being able to deliver in the appropriate timescale could cause long-lasting damage to Spirent's reputation and relationships.

Over recent years there has been significant consolidation in our customer base amongst service providers and network equipment manufacturers. This trend continues and often results in delays in spending, thereby reducing demand for Spirent's solutions and services. It also reduces the potential number of customers to which those solutions and services could be sold.

Changes in our customers' technology investments can result in reduced spending on our existing solutions before customers and those in the customers' supply chains increase spending on new technologies.

Strong customer relationships are critical to Spirent. We aim to provide innovative solutions which meet customers' needs and we place great emphasis on providing professional service and support.

One of the Group's strategic objectives is to invest in deepening our customer relationships and our key account management initiatives assist to ensure robust relationships with our largest customers. We place engineers on site with our customers and undertake site surveys of intended plans for the use of test solutions in their business.

We seek to establish thought leadership in our industry through participation in standards bodies and industry forums, which in turn creates additional links with customers. Our approach is to play a key part in the wider supply chain to our key service provider customers by aligning with early adopters of technology

Actions by competitors and increased competition can bring about pressure on Spirent's gross margin. These factors could also affect Spirent's competitive position, thereby reducing revenue and consequently affecting financial results.

Consolidation continues within our sector. The consolidation of competitors may bring opportunities for Spirent but can also change the competitive landscape as competitors are able to leverage product capabilities or sales channels

The Group's broad solution portfolio, market-leading capabilities and customer focus continue to address this risk.

Spirent aims to maintain market-leading positions through significant investment in the development of differentiated products.

Competitor activity is closely monitored with a view to maintaining clear differentiation based on Spirent's products, services and global reach.

Underperformance by acquisitions will impact the Group's results and may lead to impairment of goodwill and/or intangible assets.

Rigorous strategic and financial evaluations of all acquisition opportunities are carried out. Detailed financial and commercial due diligence is performed. The Board will only authorise transactions after all due diligence has been successfully completed and where the financial hurdles are within the agreed guidelines.

Integration plans and processes are carefully considered prior to acquisition.

The Board reviews post-acquisition performance.

Intense competition for personnel is faced from other companies and organisations and the loss of key employees, the failure to attract and retain other highly skilled employees, or the failure to adequately plan for succession may impair Spirent's ability to run and expand the business effectively.

Investing in people is at the core of the Group's strategy. The aim is to find, keep and engage the highest calibre of employees and encourage their contribution and development. An environment that fosters innovation and collaboration is critical to Spirent's success, as is ensuring incentive plans are competitive.

We have refined our employee value proposition and continue to make Spirent a more inclusive, diverse and engaging place to work to attract and retain talent.

Succession planning for senior posts in the Company is reviewed periodically by the Board.

Appropriate career paths and internal recognition programmes are developed for both technical and non‑technical staff.

Regular reviews are performed to ensure that all elements of compensation across the Group are competitive with the market.