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Risk management is an essential part of planning, decision-making and management processes, and a renewed risk management programme from 2009 is applied in all of Glaston’s operations worldwide. The objective of risk management is to ensure the achievement of business targets and to safeguard operational continuity. Glaston applies a risk management policy approved by the company’s Board of Directors.
The principle guiding Glaston’s risk management is the continuous, systematic and appropriate development and implementation of the risk management process, with the aim of the comprehensive recognition and appropriate management of risks.
From the perspective of risk management, Glaston has divided risks into four different groups:
Risks of property, business interruption and liability losses arising from the Group’s operations have been covered by appropriate insurance, and management of financial risks is the responsibility of the Group Treasury in the Group’s parent company.
Glaston’s risk management consists of the following stages: risk recognition, risk assessment, risk handling, risk reporting and communication, monitoring of risk management measures and processes, operational continuity planning and crisis management.
As part of the risk management process, the most significant risks and their possible effects are reported to company management and the Board of Directors regularly, based on which management and the Board can make decisions on the level of risk that the business areas and units are possibly ready to accept in each situation or at a certain time.
In practice, risk management consists of appropriately specified tasks, operating practices and tools, which have been adapted to Glaston’s business area, business unit and Group-level management systems. Risk management is the responsibility of the directors and managers of each business area, business unit and Group function. Risk recognition is in practice the responsibility of every Glaston employee.
A strategic risk for Glaston is above all the possible arrival on the market of a competing machine technology, which would require Glaston to make considerable product development investments. Moreover, loss of the Group’s market shares, particularly in the most strongly emerging markets (Asia, South America) is a strategic risk.
Glaston’s most significant operational risks include management of large customer projects, the availability and price development of components, management of the subcontractor network, and the availability and permanence of personnel.
Financial risks connected with operations, such as foreign exchange, interest rate, financing and counterparty risks and, particularly in the last year, credit loss and liquidity risks have grown. The nature of international business means that the Group has risks arising from fluctuations in foreign exchange rates. Changes in interest rates represent an interest rate risk. Credit and counterparty risk arises from risk associated with the payment period granted to customers. The liquidity risk comes from the fact that the Group’s negotiated credit facilities are insufficient to cover the financial needs of the business.