Raisio’s Risk Management Policy defines the objectives, principles and responsibilities of risk management. Risk management focuses on preventive action.
Risk Management Policy
The target of risk management is to identify risks and safeguard the continuity and integrity of Raisio’s business operations, safety of products and activities, personnel and property. Furthermore, Raisio aims at anticipating and preventing events undermining shareholder value.
Raisio’s risk management emphasises preventive actions and aims at the comprehensive development of risk management. The Divisions independently make operational risk management decisions. These include, for example, occupational safety, partner selection and payment terms.
Raisio has a Group-wide insurance programme to manage, for example, risks related to property and continuity of operations. The management of financial risks is centralised to the Finance Department. Findings of internal control and business risks are reported to the Board as part of monthly financial reporting.
Risks and sources of uncertainty in business operations
As an international food chain operator, Raisio’s operations are affected by the overall economic development and consumer demand. Raisio estimates that the grocery market will remain fairly stable compared to other sectors in the company’s key markets. However, the decline in consumer purchasing power resulting from, e.g. import duties, sanctions and exchange rate changes, may pose challenges for the company’s businesses. Changes in the retail sector and intensifying competition are a challenge for the food industry too, through sales prices and sales terms in all Raisio’s main markets.
Changes in the availability, quality and price of our key raw materials, such as grains, are a major challenge for Raisio’s operations. Extreme weather events linked to climate change have an impact on the grain harvest expectations, supply, demand and price. Changes in supply, demand, quality and price of other key raw materials, such as sterols and soy products, are challenges for Raisio’s operations. Extreme weather events, such as long heatwaves, are a challenge for Raisioaqua’s fish feed business in the company’s main markets, Finland and Northwest Russia.
Preparing for Brexit is particularly important for Raisio as the UK is the biggest market for the Benecol products. Raisio has assessed major risks and necessary measures related to the Brexit implementation. Brexit together with possible changes in the subcontracting chain and licensing expose Benecol business, in particular, to availability, price, currency and market risks that may lead to reorganisation in order to secure the supply chain and business profitability.
Changes in exchange rates have an impact on Raisio’s net sales and EBIT, directly and indirectly. They may also affect the utilisation rates of Raisio’s production plants through the changes in demand. Changes in the Raisio’s key currencies affect the results of the Group’s subsidiaries, largely due to the purchases of the Benecol business. Volatility in the external value of the rouble affects the export of both fish feeds and flake products.
Currency conversions also affect Raisio’s reported net sales and EBIT. With the currency conversion, particularly the changes in the UK pound have a major impact as a significant part of Raisio’s net sales and EBIT are generated in the UK-based subsidiary.
To ensure growth and profitability of its operations, Raisio may carry out corporate restructuring, significant investments and/or other projects that may result in significant items affecting comparability.