Investors

Risk management and control

Risk management is part of the company’s monitoring system and it aims to ensure that the risks to which the company’s business is exposed are identified, evaluated and monitored. It aims to help forecast the threats and opportunities for business operations and ensure the continuity of business.

The objective of internal control and risk management related to Componenta’s financial reporting is to ensure that the reporting is reliable and in compliance with all applicable laws and regulations.

Componenta compiles its financial reporting in accordance with the International Financial Reporting Standards (IFRS), the Finnish Securities Markets Act, the Finnish Accounting Act and the guidelines and statements of the Finnish Accounting Board, while also complying with the rules and regulations of the Financial Supervisory Authority and the rules of the Helsinki stock exchange.

Risk management

The Board of Directors confirms the principles and responsibilities for risk management. The President and CEO supervises the implementation of the risk management program and ensures that it focuses on matters that are essential for local and operational activities. The Corporate Executive Team participates in identifying and evaluating risks, in allocating responsibilities and in monitoring the risks.

The CFO is responsible for the general development of Componenta’s risk management.

The Group’s COO is responsible for identifying and managing risks in business operations.

All employees are responsible for identifying and evaluating the risks that are related to their work or that are otherwise under their control and for reporting them to their supervisors.

The financial risks relating to Componenta Group’s business operations are managed in accordance with the treasury policy approved by the Board of Directors. The Group’s treasury department manages financial risks and ensures, for their own part, the availability of equity and debt financing to the Group on competitive terms. The Group’s treasury department is also responsible for managing and hedging the cash position. Due to restructuring programs, it may also be possible to locally agree on the hedging of financial or currency risks in subsidiaries on terms approved by the Group. The availability of external funding is currently limited due to company restructuring programs and weak credit ratings.

The Corporate Executive Team conducts the Group-level Enterprise Risk Management (ERM) process annually and monitors the major risks of the operations regularly. In the context of the ERM process, the main risks are identified and evaluated and corrective actions are decided on.

Componenta’s most significant business environment risks, operational risks and financial risks are presented on the Group’s website at Description of risks.

Control environment

The purpose of Componenta’s internal control is to ensure that the Group operates in line with its strategy profitably and effectively, that risk management is arranged appropriately and adequately, and that financial and operational reporting is reliable. Control is based on Componenta’s values, operating principles, policies and guidelines (Communications and Disclosure Policy, and Code of Conduct). Internal control is part of management, governance and daily operations.

Financial reporting and supervision are based on monthly performance reports as well as on budgets drafted and confirmed annually. The CFO is responsible for the financial reporting process and for ensuring that the related instructions are consistent and updated regularly. Business controllers and managers are responsible for ensuring that reporting is carried out in accordance with instructions.

Open and adequate communications ensure an effective and functional control environment. Information on reporting tools as well as instructions and principles relating to financial reporting have been provided to all the parties involved in financial reporting, and they are also available on the Group’s intranet. Matters such as upcoming changes to IFRS and accounting principles or new reporting requirements are communicated to the financial organization on a regular basis. The Group’s CFO reports to the Board of Directors regularly on matters pertaining to internal control.

Internal control

The profitability and efficiency of Componenta’s operations and the achievement of financial objectives are monitored regularly by means of Group-wide financial reporting. The effectiveness of measures in internal control related to financial reporting is monitored by the Board of Directors, the President and CEO, the Corporate Executive Team and operational management teams.

Common, Group-wide ways of operating also cover financial and operational reporting. The relevant instructions can be found on the Group Intranet. The CFO has defined the control measures which cover the reporting process and allocated responsibilities for their implementation.

All operational business units have their own controller who is responsible for the unit’s financial reporting in cooperation with the management of the respective unit. Each business unit’s management presents its financial report with analyses monthly to the Group's COO and CFO. In addition, the Corporate Executive Team discusses the reports monthly at its meeting.

The Board of Directors is responsible for the final evaluation of the Group’s result.