RISK MANAGEMENT
The purpose of risk management is to promote the achievement of the Group’s goals. Risk management aims to proactively identify and manage potential problems and to identify and seize business opportunities. Risk management supports the development and implementation of Aspo Plc’s strategy.
The purpose of risk management is that:
- Aspo Plc has an effective risk management control model, and related processes integrated into its business management.
- Managers have access to high-quality and up-to-date information about business risks and their control measures, providing support for decision-making.
- The probability of the materialization of risks and unexpected events and their impacts on financial performance and reputation can be reduced effectively.
- Risk management measures and selected control measures are based on Aspo Plc’s willingness to take risks and ability to tolerate risks.
- Cooperation in risk management is effective between Aspo Plc’s different businesses.
The managers of the Group and its businesses are responsible for risk management. They are also responsible for determining sufficient measures and their implementation, and for monitoring and ensuring that the measures are implemented as part of the daily management of operations.
Risk management is coordinated by SVP, Legal and Sustainability, who reports to the CEO.
The Audit Committee monitors the effectiveness of the risk management systems and deals with risk management processes, plans and reports. Each business has a separate risk management program. Business risks and their management are discussed regularly by the management teams of the
businesses. The Group’s shared functions ensure that sufficient risk assessment and reporting procedures are incorporated into the processes they are responsible for. The Group’s administration is responsible for Group-level insurance plans.
Characteristic risks in each business area are identified in the business units, assessed in the business units’ management teams, and reported to the subsidiaries’ Boards of Directors and, if necessary, also to Aspo Plc’s Board of Directors or the Audit Committee.
Risks are continuously assessed, and their management is discussed in the business units’ management teams. Risk assessments are updated in accordance with Aspo Plc’s management policy, and the most noteworthy findings are presented in the quarterly interim reports. Financial risks, their management principles and the related organizations are presented in the notes to the financial statements.
RISKS AND NEAR-TERM UNCERTAINTIES
Board of Directors' Report 2024
The main uncertainties in Aspo’s financial performance are related to the demand for maritime transport and to some extent also to the development of market prices and the
volume and price development of the products sold by Telko and Leipurin. These conditions are affected by general economic developments. In 2023 and 2024, economic
growth in Europe has been very low. In particular, industrial production has been low or even declining. Low consumer and industrial confidence and high geopolitical uncertainty
have negatively impacted investment activity and reduced the demand for industrial and consumer products and services. Delay or further deterioration of the recovery of economic
activity may have a negative impact on the profitability of Aspo’s business operations.
Geopolitical tensions, such as Russia’s ongoing war in Ukraine, increased security threats in the Baltic Sea, conflicts in the Middle East and trade tensions between major
economies, continue to cause great uncertainty in the operating environment and may undermine overall economic growth, affect energy prices and interrupt shipping,
and lead to increased costs, disrupt supply chains and change trade flows. The prolongation and possible expansion of geopolitical tensions may have a negative impact on business operations in Aspo’s market areas.
Increasing global tensions can worsen the operating conditions in all business operations. In line with its strategy, Aspo aims to increase its profit through investments in
environmentally friendly vessels and through acquisitions. The future profitability of these investments involves uncertainty. Implementing the strategy, combined with the
currently relatively high financing costs, can reduce the free cash flow and weaken the balance sheet and solvency.
Changes in environmental legislation and uncertainty in the schedule of the green transition may affect the competitiveness of Aspo’s business operations, as well as
the competitiveness of Aspo’s key principals and customers. This may negatively impact Aspo’s business volumes and margins.
Aspo’s operations depend on the availability of IT systems and network services. Lack of services can cause disruptions to business operations. Recent geopolitical tensions
have increased the threat of cyberattacks. Because the estimates concerning the future presented in this annual report are based on the current situation, they involve
risks and other uncertainties that may cause actual future outcomes to differ from the estimates.