Risk management is an important part of the management system of Fazer Group. The Board of Directors approves the risk management policy and monitors its compliance.

Risk management is an important part of the management system of Fazer Group. The Board of Directors approves the risk management policy and monitors its compliance. Risk management is a continuous and systematic process and its task is to support the implementation of the Group’s strategy and business targets, secure the recognition of risks affecting the company’s business, assess, monitor and anticipate threats and opportunities affecting business and secure the continuity of operations. 

The management of the Business Areas, Business Units and Group functions is responsible for the identification and evaluation of the risks of their respective areas and for mitigating these risks as part of their operative activities. Financial risks are administered by Group Finance. The Group’s Chief Financial Officer (CFO) is responsible for the management and development as well as reporting of risk management to the Board and the Audit Committee. The CFO also supports the Business Areas, Business Units and Group functions in risk management.

Fazer defines risk as external or internal uncertainty that may affect the Group in the execution of its strategy, achievement of its goals or continuity of its businesses. Risks may be caused by events within Fazer, or by external conditions or events. For the identification and monitoring of risks, these are divided into four categories: strategic risks, operational risks, hazard risks and financial risks.

Adaptability, Markets and customers, Business development
Personnel, Processes and controls, Operational framework

Strategic risks are external risks that affect the whole industry (change in demand, raw material availability, change in regulation, change in competitive field, etc.) or self-inflicted risks due to strategic choices (new business development, M&A, partnerships, dependency on one market/customer, sustainability, etc.). Focus on strategic period: 3–5 years.

Operational risks are related to the implementation of the strategy and everyday business activities. These include, for example, supply chain efficiency, customer relations, raw material prices, managing projects, IT, security and personnel related risks. Focus on budgeting period: 1–2 years.

Property, Liability, Health and safety
Foreign exchange, Interest rate, Liquidity, Funding, Counterparty

Hazard risks comprise errors, malfunctions and accidents that occur within Fazer or in the business environment and that cause damage or loss.

Financial risks are related to changes in market prices, the sufficiency of financial assets and the ability of counterparties to meet their financial obligations.

The most significant risk related to Fazer’s operations includes raw material risks (price and availability risks mitigated with e.g. hedging and contractual arrangements), risks related to customers and consumer demand (mitigated with e.g. portfolio and brand management), product safety risks (mitigated with e.g. food safety management and quality certifications), political environment (mitigated with e.g. close monitoring of political development) and hazard risks (mitigated with e.g.  Group insurance programmes, regularly updated risk analyses and continuity plans for all key plants as well as investments in workplace safety to prevent occupational accidents and risk of occupational diseases). These risks together or separately may have an effect on Fazer’s business, results, financial standing, competitiveness or reputation.

Climate change affecting raw material availability, price and quality as well as water-related risks are recognised risks for food production. Fazer has recognised potential risks compromising human rights or unethical practices that may occur especially within the value chains. Any possible risk related to the realisation of human rights, anti-corruption or bribery is managed with the help of personnel training, internal policies and audits. Human rights related risks are also mitigated by following UN Guiding Principles on businesses and human rights and processes described in these guiding principles. Fazer has implemented a whistleblowing system that provides an opportunity to report suspicions of misconduct. It is available to employees and external parties.

All Fazer’s markets were impacted by the COVID-19 pandemic. The Retail business, including the Fazer Cafés and the Gateau bakery shops, Travel Retail, the frozen bakery business as well as on the go categories were most severely hit. Prompt mitigation actions were taken throughout the year to ensure safety and business continuity.