As part of the annual risk management cycle, the Executive Board of Directors (EBD) conducted a company-wide risk assessment over the course of 2021. The assessment aimed to identify key risk areas, validate the effectiveness of internal control measures, and identify the actions required to manage risk within SHV parameters.
The assessment confirmed the company’s risk appetite as strategically open with a conservative attitude to operations and finance. SHV remains committed to a way of working that makes no compromise on safety, quality, and compliance. With respect to the latter, the Executive Board of Directors reiterated a zero-tolerance approach to areas such as fraud, bribery and corruption.
By adopting an outside-in perspective, the assessment identified 14 key risks currently faced by the organisation. Geopolitical and macro-economic factors remain in wake of the global pandemic and political unrest - the effects of which will continue to be felt in the coming years. Challenges in the supply chain also pose a threat, linked to pandemic measures as well as climate change. The pace of digitalisation and technological developments also needs to be addressed by Group business models. And with the world confronted by increasingly severe cyber-attacks and ever more sophisticated cyber threats, IT security needs to be continually managed.
Risk is also present in continued tight labour markets that limit the company’s ability to attract and retain the talent and specialist skills required by certain areas of the business. And finally, the speed and breadth of legislative change around the world creates a continuous need to stay abreast of all necessary compliance measures, laws, and regulations. For example, potential changes to ESG-related regulation represent a significant new risk - mainly pertaining to the financial sustainability aims of the European Commission and its Corporate Sustainability Reporting Directive (CSRD).
The company’s regular business processes, together with a robust set of internal controls, continue to effectively manage these risks. As part of an update to internal control measurements, a number of processes have been improved to ensure this remains the case. For instance, the rolling forecasting process has been refined to ensure strategic delivery agendas incorporate an outside-in perspective, in addition to relevant actions aimed at enhancing managerial responsiveness.
In terms of safety, we continued to increase awareness and promote a safe and healthy work environment through safety leadership programmes and Group-specific Life Saving Rules. On a cultural level, our purpose “Courage to care for generations to come” underpins the company culture by highlighting our core values.
The company tests the effectiveness of internal control measures throughout the organisation twice a year, with the results reported to local management, Group Management, the Executive Board of Directors, and Supervisory Board of Directors.
Overall, the EBD considers that these measures, together with existing operating procedures and control frameworks, effectively address the risks that confront SHV both now and in the foreseeable future.