As the company operates globally, it is inevitably exposed to foreign exchange risks. Natural hedging through making sales in the same currency as the respective purchases is the primary method to mitigate the risk. Also financial hedging is used and the hedging process has been improved. Foreign exchange translation risk related investment in subsidiaries is managed by minimizing the amount of equity investment in the subsidiaries.
There is also financial risk related to the company’s defined benefit pension schemes, especially in the U.S., Germany and the U.K. Unfavorable market movements might increase the need to fund the pension plans compared to current estimates. Actions to mitigate the risk include monitoring the liabilities and taking part in investment decisions as well as identifying possibilities to dispose of the funds through a buy-in arrangement with a third-party.