Read about risk management at Volvo Cars
Risks are a natural element in all business activities. In order to achieve Volvo Cars’ short and long term objectives, enterprise risk management is part of the daily activities at Volvo Cars.
Volvo Cars’ enterprise risk process is based on the ISO 31000 standard and is used in the enterprise risk management efforts. There is a framework for how to identify risks, and how to describe the risks, and when a function’s identified risk becomes an enterprise risk. There are risk managers appointed within each function of the company, working with their function’s management team to identify risks. The risk managers report to the enterprise risk manager.
The enterprise risk report consists of two parts: short term risks and long term risks, including mitigating actions. The enterprise risk report is reviewed by the Executive Management Team and the current status is reported at each Board of Directors and Audit Committee meeting.
Acting in a global business environment, Volvo Cars’ risks are identified in different areas based on past and existing strategies. Volvo Cars has growth plans for the coming years, so it is important to secure competence within key areas, and the financial resources and flexibility to address risks implied in the growth plan.
Highlights of the key risks include the product strategy and product plan. The risks identified are both operational and process-related, and will be mitigated through innovation, industry-leading technologies and process improvements.
The Chinese market is Volvo Cars’ largest market, and Volvo Cars’ industrial footprint is expanding. The Chinese market, with the high pace of change and the fact that Volvo Cars’ volume is growing considerably, is considered an opportunity but also a risk.
Information technology is an increasingly diverse area, through the development of connected cars. Risks are identified with Volvo Cars’ internal infrastructure and its products. Mitigating actions are progressively being executed.
Volvo Cars’ income, financial position and cash flow are sensitive to the fluctuations in the currency market. This currency risk is being mitigated by an active hedging strategy. The long-term exposure is dependent on Volvo Cars’ global sales – the existing mix of production facilities and supplier structure – and this creates an exposure in cost base that is different from income currencies, interest rates and commodity prices. Financing of Volvo Cars is managed in accordance with Group Treasury policy.