The Group’s risk management aims to ensure the continuity of business and the Group’s capacity to operate in any risk scenarios that can be identified in advance. Revenio Group Corporation’s Board of Directors confirms the risk management principles, strategic targets and priorities.
Risk management responsibilities and roles
The implementation of risk management is the responsibility of business Management Teams and the Group’s Management Team. These bodies ensure that sufficient risk identification, assessment, management and reporting procedures are included in the processes under their respective responsibilities.
Subsidiaries’ business Management Teams locally organize risk management implementation methods, taking the subsidiary’s size into account. For certain risk management areas in which a centralized approach is appropriate, such as the management of insurance and financial risks, the parent company’s Board of Directors makes such decisions based on a proposal by the President & CEO.
Risks and any changes therein are reported to Revenio Group Corporation’s Board of Directors. At least once a year, the Board considers major risks and their management, and analyzes the effectiveness of risk management. Risk management is assessed by the Internal Audit function during internal audit procedures.
Risk management implementation
The management of the subsidiaries will assess the risks when preparing annual plans. Business segments’ management discuss risks and their management, and update risk assessments at least once a year. Separate risk analyses are made for significant projects, such as major customer projects.
Major risks and uncertainty factors
Revenio Group’s risks are defined as strategic, operational, trade cycle, hazard, and financial risks.
The Group’s strategic risks include competition in all sectors, the threat posed by new competing products, and any other actions of the company’s rivals that may affect the competitive situation. Another strategic risk is related to the ability to succeed in R&D activities and to maintain a competitive product mix. The Group develops new technologies and any failure in the commercialization of individual development projects may result in the depreciation of capitalized development expenses, with an impact on the result. Strategic risks in the Group's segments that require special expertise are also associated with the successful management and development of key human resources and the management of the subcontractor and supplier network.
Corporate acquisitions and the purchase of assets with growth potential related to health tech are part of the Group’s strategy. The success of these acquisitions has a significant impact on the achievement of growth and profitability targets. Acquisitions may also change the Group’s risk profile.
Strategic risks and the need for action are regularly assessed and are monitored in connection with day-to-day management, monthly Group reporting, and annual strategy updates.
Operational risks are associated with the retention and development of major customers, the operations of the distribution network and success in extending the customer base and markets. As a result of the CenterVue acquisition, major individual customer deliveries may have a greater impact on the key figures of an individual quarter and hence cause greater quarterly fluctuation. In particular, operational risks include factors related to expansion into new markets, such as national regulations various countries have governing marketing authorizations for medical instruments and the related official decisions concerning the health care market. Success in health tech R&D projects launched in accordance with the strategy can also be classified as an operational risk.
The operational risks related to the manufacture, product development, and production control of medical instruments are estimated to be higher than average, because of that sector’s requirements concerning quality.
Hazard risks are covered by insurance. Property and business interruption insurance provide protection against risks in these areas. The business pursued is covered by international liability insurance.
Financial risks can be further categorized into credit, interest-rate, liquidity, and foreign exchange risks. To manage credit loss risks, the Group has taken out credit insurance that covers selected customers. Every month, and more frequently if necessary, the Board, in its meetings, assesses matters related to financial issues. If required, the Board provides decisions and guidelines for the management of financial risks concerning interest-rate and currency hedging, for instance. The liquidity risk can be affected by the availability of external financing, the development of the Group’s credit standing, the trend in business operations and changes in the payment behavior of customers. Liquidity risks are monitored by means of cash forecasts, which are drawn up for periods of 12 months at most at a time.