Risk management, Control environment

 and Internal monitoring

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 forecast the threats and opportunities for business operations and ensure the continuity of business.

The objective of internal control and risk management related to Componenta’s financial reporting is to ensure that the reporting is reliable and that all applicable laws and regulations have been complied with.

Componenta compiles its financial reporting in accordance with the International Financial Reporting Standards (IFRS), the Finnish Securities Markets Act, the Finnish Accounting Act and the guidelines and statements of the Finnish Accounting Board, while also complying with the rules and regulations of the Finnish Financial Supervisory Authority and the rules of Nasdaq Helsinki Ltd.

Risk management

The Board of Directors confirms the principles for risk management and those responsible for this. The Board of Directors monitors the effectiveness of risk management systems. The President and CEO supervises the implementation of the risk management program to ensure that it focuses on matters that are essential for local and operational activities. The Corporate Executive Team participates in identifying and evaluating risks, allocating responsibilities and monitoring the risks.

The CFO is responsible for development of Componenta’s risk management.

Management of business operations is responsible for identifying and managing risks in their own business areas as part of their operational activities.

All employees are responsible for identifying and evaluating the risks that are related to their work or that are otherwise under their control and for reporting on them to their supervisors.

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 ensures, for their own part, the availability of equity and debt finance to the Group on competitive terms. The Group’s treasury department is also responsible for managing and possible hedging the cash position.

The Corporate Executive Team conducts the Enterprise Risk Management (ERM) process annually and monitors the major risks to operations regularly. The main risks are identified and evaluated in the ERM process and corrective action is decided on.

Componenta’s most significant business environment risks, operational risks and financial risks are presented on the Group’s website at Description of risks.

Control environment

The purpose of Componenta’s internal control is to ensure that the Group operates in line with its strategy profitably and effectively, that risk management is arranged appropriately and adequately and that the financial and operational reporting is reliable. Control is based on Componenta’s values, operating principles, policies and guidelines. Internal control is part of management, governance and daily operations.

Financial reporting and monitoring activities regarding its correctness are based on annual and approved budgets, monthly forecasts and profit and loss reporting. The Group Finance and the administration of Group’s Units are responsible for the financial reporting process and the regularly updated instructions.

Open and adequate communication ensures an efficient and effective control environment. Information on reporting tools, guidelines and principles for financial reporting have been onboarded with all those involved in financial reporting in accordance with their respective responsibilities. The guidelines and principles for financial reporting are available within the Group Finance and on the Group’s intranet to that extent as the guidelines also affect the Group’s other functions. New reporting requirements and other requirements alike are regularly reported within the financial organization in accordance with respective responsibilities of each individual. The Group CFO regularly reports to the Board of Directors on matters related to internal control.

The Board of Directors supervises the Group’s financial reporting process and monitors the effectiveness of internal control, internal audit and risk management systems.

Internal monitoring

Internal monitoring The profitability and efficiency of Componenta’s operations and the achievement of financial objectives are monitored regularly by means of Group-wide financial reporting. The effectiveness of measures in internal control related to financial reporting is monitored by the Board of Directors, the President and CEO, the Corporate Executive Team and operative management teams.

Group-wide joint practices also cover reporting, the instructions for which are communicated regularly with those involved in the reporting process in accordance with their respective responsibilities. The Group Controller monitors the implementation of measures in accordance with the guidelines for Group-wide reporting processes together with the Group CFO.

A unit controller is responsible for the financial reporting of operational business units in cooperation with the management of each unit. The management team for each business unit and business area analyses its own financial reports, including volumes, profits, costs, profitability and working capital, every month before the reporting meeting of the Corporate Executive Team.

The Board of Directors is responsible for the final evaluation of the Group’s result.