The objective of Vaisala’s risk management is to identify and manage material risks related to strategy implementation and business operations. Vaisala has a risk management policy, which has been approved by the Board of Directors and which covers the company’s strategic, operational, hazard, and financial risks. The policy aims at ensuring the safety of the company’s personnel, operations, and products, as well as the continuity and compliance of business operations.
The Board of Directors defines and approves risk management principles and policies and assesses the effectiveness of risk management. The Audit Committee reviews compliance with risk management policy and processes.
Vaisala’s Risk Management Steering Group comprises key internal stakeholders. The Steering Group is responsible for the operational oversight of the risk management process and for assuring that all significant risks are identified and reported and risks are acted upon on all necessary organizational levels and in all geographical locations.
Risk management is integrated into key business processes and operations. This is accomplished by incorporating applicable risk identification, assessment, management, and risk reporting actions into the core processes. The most significant risks are reported to the Vaisala Management Group quarterly and to the Audit Committee annually.
Annual Report 2017
Near-term Risks and Uncertainties
Uncertainties in political situation and governmental customers’ budgetary constraints or changes in their sourcing criteria may reduce or delay demand for Vaisala’s products and services.
Delay in developing applications for digital solutions as well as acquiring and in building related competences for sales and business operations may slow down growth in Weather and Environment Business Area. Closing of infrastructure contracts in Weather and Environment Business Area may be postponed by budgetary constraints, complex customer decision making processes, changes in scope, and financing. Disturbance in project delivery performance may reduce or prolong associated profit. Thus, Vaisala’s financial performance may vary significantly over time.
Prolonged new product ramp-ups, market acceptances and regulatory certifications of new offering, such as power transformer monitoring products, supplementary air quality sensors and networks, digital solutions and continuous monitoring systems, may postpone realization of Vaisala’s growth plans.
Long interruption in production or test equipment or disruption in suppliers’ and subcontractors’ delivery capability or product quality may impact significantly Vaisala's net sales and profitability. Cyber risk and downtime of IT systems may impact operations, and delivery of digital solutions.
Vaisala’s capability to successfully complete investments, acquisitions, divestments and restructurings on a timely basis and to achieve related financial and operational targets includes uncertainties and risks, which may negatively impact net sales and profitability.
Further information about risk management and risks are available on the company website at www.vaisala.com/investors, Corporate Governance and www.vaisala.com/investors, Vaisala as an Investment.
Financial Statement Release 2017, February 7, 2018
Vaisala's business operations are subject to various risks which may have an adverse effect on the company. The list below is not complete but it explains some of the risks with their potential impacts and how Vaisala manages those risks today.
|Key risks 2017||Impact/Likelyhood|
|S1||Increased competition, loss of market leader and price
|S2||Unsuccessful entry into new business||Medium/Medium|
|S3||Political, legislative or regulatory changes||Medium/Medium|
|H1||Long disruption in the cleanroom’s operation||Very high/Extremely unlikely|
|H2||Field service personnel accident caused by working conditions||Very high/Low|
|H3||Critical failure of infrastructure supporting Digital Solutions||Low/Low|
|H4||Natural disaster, epidemic, civil unrest, terrorism||Low/Medium|
|OPERATIONAL RISKS||O1||Long unavailability of IT systems||Medium/Low|
|O2||Business continuity risks related to suppliers||Medium/Low|
|O3||Project delivery performance and interdependencies||Low/High|
|F1||Credit risk||Very low/High|
|F2||Liquidity and refinancing risk||Very low/Extremely unlikely|
|F3||Financial credit and interest rate risk||Very low/Extremely unlikely|
|F4||Currency risk||Very low/High|
Annual Report 2017