Risks and Risk Management
The Rapala Group’s risks consist of strategic, operational and hazard risks, as well as financial risks.
The main strategic risks relate to the status of sport fishing as a leisure time hobby, environmental issues affecting fishing opportunities, success in developing new products, competitive landscape, changes in retail structure, value of the Group’s brands, corporate reputation and other intangible assets, managing costs and productivity, development of strategic supplier partnerships, country and political risks as well as success in mergers and acquisitions.
The main operational risks relate to the effects the changes in economic cycles may have on consumer demand and customer behavior, annual seasonality of the business, weather, high interdependency between the Group’s units and consequent supply chain, inventory and supplier management issues. The Group’s main hazard risks relate to fire or other similar disaster scenarios, which could lead to property damages and business interruption losses throughout the supply chain.
The main financial risks relate to market prices, liquidity and counterparty risks. The main market price risks relate to foreign exchange rates, interest rates and raw material prices. Liquidity risks relate to availability of sufficient funding even at the peaks of the seasons. Counterparty risk relates to creditworthiness of customers and other counterparties, such as banks.
The objective of the Rapala Group’s risk management is to support the implementation of the Group’s strategy and execution of business targets. This is done by monitoring and mitigating the related threats and risks and simultaneously identifying and managing opportunities. The Board evaluates the Group’s financial, operational and strategic risk position on a regular basis and establishes related policies and instructions to be implemented and coordinated by the Group management.
The Board of Directors evaluates the Group’s strategic risks on annual basis as part of the strategy process, operational risks at least once a year as part of the operational plans and budgets and financial risks several times during the year. The CEO and the Group’s finance management continuously monitor changes in business environment and coordinate the management of the Group’s strategic, operational and financial risks.
The daily risk management activity is primarily allocated to the management of the business units, who are responsible for managing the local strategic, operational and financial risks.