Risk management

In its business operations Componenta complies with all currentlegislation and regulations and with generally accepted business practices. In addition, business activities are governed by Componenta's values and the Company's own operating principles, the Componenta Way to Operate.

Risk management is part of the Company's monitoring system and it aims to ensure that the risks to which the Company's business is exposed are identified, evaluated and monitored. It aims to help to forecast the threats and opportunities for business operations and ensures the continuity of business.

The Board of Directors confirms the principles for risk management and the President and CEO supervises the implementation of the risk management programme such that the principles and programme focus on matters that are essential for local and operational activities.

The Corporate Executive Team participates in identifying and evaluating risks, in allocating responsibilities and in monitoring the risks.

The General Counsel is in charge of the general development of the risk management in Componenta and CFO is in charge of the development of the risk management relating to financial risks.

Management of business operations is responsible for identifying and managing risks in their own business areas as part of their operational activities. Each employee is responsible for identifying and evaluating the risks that are related to their own work or which are otherwise under their control and for reporting on them to their supervisors.

The operational risks consist of Customer risks, Supplier risks, Productivity, production and process risks, Labour market disruptions, Contract and product liability risks, Personnel risks and Data security risks.

Risks related to business environment include Competition and price risks, Commodity risks and Environmental risks.

The financial risks relating to Componenta Group's business operations are managed in accordance with the Treasury Policy approved by the Board of Directors. The Group's treasury department manages financial risks and helps ensure the availability of equity and debt finance to the Group on competitive terms. The Group's treasury department is also responsible for managing and hedging the cash position.

The Corporate Executive Team conducts the group level Enterprise Risk Management (ERM) process annually and follows regularly the major risks of the operations. The Senior Vice Presidents of Operations organize operation level ERM processes annually and report the main results of the ERM process to the Corporate Executive Team. In the context of the ERM process the main risks are identified and evaluated and corrective actions are decided on.