Principles of risk management
The goal of Group’s risk management is to recognize and analyze the factors that have a negative effect on achieving the company’s goals in the short and long term, and to start procedures to minimize risks and to postpone or to remove them completely. Risk-management is part of business processes and management systems that are controlled by the board’s inspection committee.
Strategic risk management is a part of the board’s strategic process which defines in the business idea, market area and business sector.
The President and the Management Team is responsible for the operational risk management as a part of business process management and development. Risk management is an integrated part of the concern’s management, follow-up and reporting system. The main operational risks are customer, material, staff, and financial risk.
Financial risk management
The Group’s treasury operations and financial risks are managed centrally in the parent company based on the principles approved by the Board. Subsidiaries are financed through intercompany loans or local bank loans. The goal is cost-efficient risk management and optimisation of cash flows.
The Group’s currency risks consist of transaction risks related to trade receivables and payables, translation risks related to foreign subsidiaries and financial risks related to exchange rate changes. Currency risks can be hedged with forward exchange contracts. The parent company is responsible for all hedging measures. The investments in foreign subsidiaries have not been hedged.
Interest-bearing liabilities and return on financial investments carry an interest rate risk. The changes in interest rate will affect the Group’s result.The interest rate risk of loans can be controlled with the proportion between variable rate and fixed-interest loans.
The credit risks of trade receivables are the responsibility of business units. Scanfil EMS Subgroup’s current customer base, the evaluation of creditworthiness of new customers, and the active collection of late receivables reduce the risk of credit loss. The company has no significant risk of credit loss.
Considering the Scanfil Group’s balance sheet structure, the liquidity risk is very small.