Ahlstrom-Munksjö is exposed to many risks that may significantly affect the Group. In this section, the principal factors that may have a material effect on Ahlstrom-Munksjö’s capabilities to reach the goals set for the Group and the means of dealing with them, are briefly described. Ahlstrom-Munksjö’s near-term risks are specified in the quarterly interim reports. Ahlstrom-Munksjö is actively working to reduce the effects of these risk factors through preventive measures. When preventive measures are not viable, the risk may be hedged or insured as mitigation.
Many of the risks can have both positive and negative effects. The processes of dealing with risks are overseen by the Board of Directors and the Audit Committee, and managed on the operational level by the President and CEO, Executive Treasury Committee, Deputy CEO and CFO, key management, and other employees. The risk assessment process is performed by the Executive Management Team, based on their objectives, and includes risk identification, risk driver analysis, identification of risk owner and assessment of potential impact, likelihood, trend and acceptability. An identification of preventive actions is also included. The likelihood described is based on a 3–5 year horizon and the impact relates to the estimated financial effect.
You can read about the likelihood and financial impact of our risks in Annual Report 2020 on pages 67-72.
Ahlstrom-Munksjö Group has a Risk Management Policy, which is reviewed annually by the Board. The policy sets out the principles for the risk management process as well as the split of responsibilities and reporting within the Group, to ensure that risks are properly managed and monitored.
The Board, assisted by the Audit Committee, is responsible for the risk oversight within the Group while the President and CEO is responsible for assessing and reporting the Group’s consolidated risk exposure to the Audit Committee.
Ahlstrom-Munksjö has defined a process for assessing, mitigating and monitoring risks to support the achievement of strategic goals and business objectives. The risks are primarily identified by the business area and Group management teams in accordance with the Group Risk Management Policy. The Executive Management Team is required to update the risk evaluation at least once a year. The format and methodology used for the risk evaluation is an Enterprise Risk Management (“ERM”) framework.
In Ahlstrom-Munksjö, the main principle is to manage risks at their source, i.e. within the business area, plant or function where risks may occur. Risk treatment and monitoring actions for the assessed risks are defined and carried out by the appropriate management at different levels of the organization. To realize economies of scale and to ensure appropriate Group-level control, certain risk management activities such as the establishment of Group-wide insurance programs and management of the Group’s financial risks are centralized.
Read more about internal control and audit in the Corporate Governance Statement 2020.