Risk Management

Risk Management

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

Risk Map

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
premium position
  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
  H5 Cyber risk Low/High
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
  O4 Inventory risk 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