Risks and risk management
Risks are a natural part of all business operations and risk-taking is a prerequisite for financial growth. Appropriate risk management is therefore fundamental to running and developing sustainable, profitable business operations. The aim of Dustin’s risk management is to ensure proper control of the Group’s collective risk exposure and to ensure cost-efficient, systematic management of risks and opportunities in the operations that will create value. This way, the Company will improve its decision-making processes and increase its opportunities to achieve its strategic, financial and operational targets while complying with laws and regulations.
Dustin’s Group-wide risk management process is integrated into the operations and is based on cooperation between Dustin’s Risk Committee, Executive Management Teams and other individuals who work on different parts of the risk management process. The process consists of four main activities: (i) Identification, (ii) Assessment and Prioritisation, (iii) Response and Mitigation and (iv) Reporting and Monitoring.
Risk is defined as a future uncertain event that could have an adverse impact on Dustin’s ability to achieve the company’s strategic, financial and operational targets and comply with laws and regulations.
Identification
Our risk identification is carried out by the Group’s executive management teams. Each team identifies the most important risks for their area of responsibility and appoints a risk owner for each risk.
All risks are classified into one of the following three categories: strategic risks, operational risks and external risks. This allocation provides support in choosing suitable methods to identify current, new and emerging risks, the link between them and how to manage them.
- Strategic risks are associated with the development of operations, and are normally identified during discussions linked to strategic plans or strategic initiatives. These risks are managed by measures that restrict the impact and probability of the risk occurring.
- Operational risks are associated with operational activities, and identified primarily in procedural reviews and follow-ups on business. Management of operational risks focuses primarily on limiting the probability of the risk occurring, for example, through internal controls as well as guidelines and instructions for internal procedures.
- External risks are associated with uncertainties outside the direct control of the Group, for example, changes to regulations or changed market conditions. These risks are managed through such measures as routine monitoring of changes in regulations and trends in the market.
Assessment and prioritisation
The extent of the identified risks is evaluated using a risk tool that takes into account both the potential impact of the risk on the operations and the likelihood of the risk occurring over a defined period of time. This provides support when deciding upon the significance and prioritisation of the risk and what response it should be given.
Response and mitigation
The choice of response and mitigation is determined by using a risk assessment and existing controls. This could include, for example, monitoring methods, implementing extra controls to reduce the risk, or amending procedures and processes. An important part of Dustin’s risk management is the appointment of a risk owner for all prioritised risks. The risk owner is responsible for pursuing measures to manage each risk within a reasonable time frame and with a high level of quality.
Reporting and monitoring
Each risk owner monitors the current risk and reports their findings back to the Risk Committee. The Risk Committee compiles, coordinates and develops the Group’s risk management, after which reports are submitted to Group Management and the Board of Directors.
The Group’s largest risks and the measures for managing them are reported at least twice per year to the Audit Committee.
For a detailed description of the risks that are expected to be particularly significant for the future development of the Group, refer to Dustin’s Annual and Corporate Responsibility Report.