Risk management

Risk management

Many of the risks can be turned into opportunities and competitive advantage through successful mitigation actions.

In our daily operations we face several key risks that may affect our ability to create value. The matrix below explains some of our key risks and how we manage them and mitigate their impacts.  

Our most important assets are people, property, earnings capability, customer relations, and reputation. Their preservation and security are essential for our ability to create value. It is in the interest of our employees, customers, shareholders and communities in which we operate that we minimize the impacts from the identified risks. The main principle is to manage those risks at source. Many of the risks can be turned into opportunities and competitive advantage through successful mitigation actions.

Responsibility

The Board of Directors has the ultimate responsibility for Ahlstrom’s risk management. The Board reviews the identified key risks and is responsible for the determination of risk appetite and tolerance. 

The President & CEO, Executive Management Team, and other management at Group, business area, and plant levels are responsible for implementing the Risk Management Policy.

 

  Risk description          Actions to mitigate
Business & market   environment
  • Increased competition
  • Fluctuations in demand
  • Ability to foresee changes in customer needs and delays in launching new products
  • Changes in political environment  
  • Demand planning process
  • Continuous market intelligence
  • Product development process improvement
  • Tracking system to prevent trade to embargoed countries
Financial
  • Exchange rate fluctuations
  • Defined pension benefit plans
  • Financial hedging policy
  • Improved control over investment activities of the pension funds
Sourcing & manufacturing 
  • Fluctuations in the prices of raw materials and energy
  • Inflexibility to adjust production capacity
  • IT security and contingency of IT operations
  • Improved contract management and legal support
  • Data collection for the basis of raw material price hedging
  • Indexed contracts
  • IT security assessment and contingency planning
Employees & safety  
  • Retention of key personnel
  • Safety risks in  manufacturing at plants
  • Human resources management plan
  • Succession planning
  • Companywide safety standards and guidelines at each location
  • Bonuses tied to safety achievements
Plants & property
  • Hazards such as fires, explosions, and natural incidents like floods and storms
  • Contingency and recovery plans at each site
Legal & compliance
  • Contract management
  • Infringement of intellectual property rights
  • Non-compliance with new and current legislation and regulation
  • Legal support in contract negotiations
  • Policies and guidelines 
  • Legal and compliancy training
  • Monitoring of local regulations
Environment
  • Environmental  legislation
  • Impact from operations into air, water and land
  • Development of formaldehyde free products
  • Life cycle assessment in product development
  • Wood fiber sourced only from sustainably managed forests
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