Electrolux is impacted by various types of risks including strategic and external risks but also business risks such as operational and financial risks. Active risk management is essential for Electrolux to drive successful operations and, accordingly, the Group monitors and minimizes key risks in a structured and proactive manner.
Electrolux risk management framework
Electrolux faces different types of risks that can be divided into: Strategic risks and Manageable business risks. The strategic risks are related to the Group’s strategy and are impacted by the external environment, while the business risks comprise operational and financial risks. These are managed by the Group’s operational units and Group Treasury, respectively. The Group has several processes to manage overall risks through operational activities that are performed by the business area boards. The Group has also established internal bodies that manage risk exposures on a regular basis. Examples of internal bodies are the Risk Management Board, the Insider Committee, the Ethics & Human Rights Steering Group, the Audit Board and the Tax Board. For more information on the Electrolux organizational structure and system for internal control and risk management, see the Corporate Governance report.
Macroeconomic trends, political uncertainties, technological transformations and changes in industry dynamics are factors that impact the environement which the Group operates in. The Electrolux board and the business area boards monitor the development in the key markets and pro actively assess external risks as well as opportunities that may influence the Group’s strategy and operations.
The Group strategy is closely linked to both the external world and to internal factors which may affect the Group’s execution of the strategy. The Electrolux board and the business area boards continuously revise the strategic framework to ensure it is up to date and its business divisions are fit to create and capture economic value. The Group’s operational units manage potential execution risk related to the strategic priorities.
The Group’s ability to improve operational performance and create long-term value for shareholders is related to achieving best-in-class consumer innovation as well as continued focus on profitable growth and driving cost efficiency. Realizing this potential requires effective and controlled risk management. Risks within operations are mainly managed by the Group’s business area boards. The Group also has internal bodies that pro actively monitor and manage operational risks.
Electrolux is impacted by financial risks such as capital market risk, credit risk and liquidity risk. These are regulated in accordance with the Group’s Financial Policy that has been adopted by the Electrolux Board of Directors. Management of these risks is centralized to Group Treasury and is mainly based on financial instruments.
