Process and analyses
Duni Group's business is affected by various external factors and is constantly exposed to risks and threats. Each year, active risk management with analyses is carried out systematically to predict factors that may negatively impact the company.
The business has employees in 21 countries, with production in Sweden, Germany, Poland, Thailand, and New Zealand. Each country has unique challenges and risks, with local regulations and laws that our company must follow.
The goal of risk management is not necessarily to eliminate risk but to identify, control, and balance various initiatives against the Group’s financial and sustainability goals. Local management teams are responsible for identifying and handling local complaints.
The risks are divided into business and financial risks.
Business risks
The business risks are divided into:
- Strategic and external risks
- Operational risks
- Sustainability risks.
These risks affect, among other things, the company’s business model and long-term strategic planning. They may harm the Group’s results or reputation.
Strategic and external risks
Strategic and external risks impact the company’s business and market position and include risks linked to investments, acquisitions, suppliers, regulations, and laws. External factors affecting operations include raw material prices, transport costs, local restrictions due to a pandemic, a worsening economy, and changes in market demand and taxes. It also includes events that could lead to fewer restaurant visits, reduced demand, increased price competition, and affect volumes and gross margins, for example, through increased discounts and customer bonuses. Developing a varied and attractive portfolio is essential for the Group to achieve good sales and earnings development.
Group Management reports risk issues on an ongoing basis to the Board of Directors, which is responsible for the company’s risk management. It may include, for example, financial status, compliance with the Group’s financial policy, and external changes globally. By identifying, mapping, and planning the Group’s risks, the management team is supported in making strategic decisions.
Operational risks
The respective operating unit typically handles operational risks. These may refer to production interruptions, IT breakdowns, fire, or other risks due to insufficient processes or handling errors. In many cases, the company can control this type of risk.
Sustainability risks
Sustainability risks include environmental, human rights, and anti-corruption risks. Other risks include being unable to keep up with external requirements regarding material development and reporting or legal requirements. These risks are managed through active preventive measures. The company also has activities and control mechanisms to counter them, for example, through audits of suppliers under our Code of Business Conduct.
Financial risks
The Group’s financial management and control of financial risks are regulated by a Financial Policy adopted by the Board of Directors. The following are examples of financial risks that are identified and managed:
- Currency risks
- Interest rate risks
- Credit risks
- Financing risks
- Liquidity risks.
These risks are controlled in the Financial Policy and the Financial Manual, which focus on unforeseen events in the financial markets and endeavors to minimize potential adverse effects on the Group’s financial results. The risks for the Group are also related to the Parent Company in all essential respects.
The risk management process
Identification
Workshops are held annually in all parts of the organization to identify and evaluate risks and trends. All risks are assessed from a probability and impact perspective. The operation owns its risks, and the results are reported directly to the relevant department, which takes a view of the measures proposed. This work is then followed up during the year. The management team studies the results, discusses trends and decides on measures. Finally, a summary of the annual work is reported to the Board of Directors.
Management
During the year, the central finance department is responsible for coordinating the risks identified and calling for additional briefings in the event of significant changes. The department is also responsible for prioritizing and managing financial risks following Duni Group’s financial policy.
The Group has a global program that manages insurable risks, which are evaluated annually to ensure that we have adequate insurance coverage. As part of preventive work, measures are also taken to reduce these risks. External risk engineers conduct annual insurance inspections at all the Group’s major production companies. In addition to these annual inspections, there is continuous follow-up in an action program to control and reduce risks.
Each manufacturing unit has a local continuity plan based on a detailed risk and impact analysis. The continuity plans are there to reduce the impact on the production cycle in the event of, for example, a fire or supplier disruption. The Group’s paper production and storage of paper products involve a high fire load. Investments are planned as preventive measures at all production facilities to mitigate and manage this conscious risk. Together with several other preventive initiatives, such as fire drills, training, maintenance, and good order, this constitutes necessary measures that ensure good preparedness and correct action.
