Risk management

As a global company, HUBER+SUHNER is exposed to a diverse set of risks. Managing these risks is an integral part of our business. Our risk management framework allows us to identify, assess, and mitigate risks in a continuous and iterative process.

Risk management framework and risk policy

Our global risk policy defines our goals and principles for effective corporate risk management. Through our risk management framework, HUBER+SUHNER assesses actual risks and identifies potential risks. Risks are assessed in a two-dimensional risk matrix based on likelihood and impact on operations. Taking diverse types of risks into account has become crucial for companies because non-financial risks associated with business activities or business relationships, products, and services can lead to major financial loss OR jeopardize our financial position . Sustainability-related risks have become an increasingly relevant driver for other risk categories with significant financial implications

Risk management process and risk governance

For each identified risk topic, a “sponsor” is assigned from the extended Executive Group Management (EGM) or other senior management. Each sponsor analyses the risk within her/his area of responsibility. This includes the following:

Each year, the risks are being reviewed and assessed for their materiality and re-prioritized where necessary. Risks which are deemed irrelevant are removed from the risk map, whereas newly emerging risks are assessed and, if qualified material for the company, are added to the risk map. The designated sponsor is in charge of identifying risk drivers, drawing conclusions, and proposing mitigating actions for the respective risk. With the annual risk report, HUBER+SUHNER provides an overview of the company’s risk position, risk profile, and top risks identified as well as mitigating actions. This report is submitted to the Board of Directors for review and approval and made available to the extended EGM including the general legal counsel, area compliance officers, and the global process owners.

Top nine risks

Risks are prioritised based on their significance with regards to the financial impact they could have on the company, and according to their probability of occurrence. The top nine risks identified in 2023 are the following (in alphabetical order):

Climate change: Climate change was added to the list of top risks in 2023. Tackling climate-related risks arising from increasing compliance obligations, growing customer expectations and requirements, and ever-higher raw material prices has become a priority for HUBER+SUHNER. This is reflected in our climate targets and transition planning, which mitigate these risks. Furthermore, we continue to monitor the evolving compliance landscape and define measures in response to regulatory changes. While our assets are currently less exposed to physical risks, such as floods, wildfires, and heatwaves, these risks need to be monitored continuously, as this may change in the medium to long term.

Cybercrime: In addition to the increasing number of “commercial” cybercriminals, government-backed criminals have entered the picture and are pursuing attacks on intellectual property (IP) and data. Next to effective information technology (IT) governance, such threats are mitigated by ensuring that information security risks at HUBER+SUHNER are identified, evaluated, and mitigated for each application level.

Disaster: Interruption of the delivery of goods to our customers is a major risk. The reasons for such interruptions can be many, including natural disaster, fire, power/gas outage, IT breakdown, strike, worldwide pandemic, geopolitical decisions, wars, or terroristic actions. We mitigate these risks through business continuity plans and emergency procedures, which are in place globally. Our global operations network supports these efforts.

Energy supply shortage and interruptions: Power shortages and interruptions have mainly been a European concern driven by the Russian invasion of Ukraine, the ongoing war, and Western countries' sanctions against Russia. However, since the beginning of the war on Ukraine, the countries of the European Union have been able to become largely independent from Russian energy supplies. In addition to mitigating this risk, we have implemented measures at our largest European production sites to ensure energy security.

Exposure to currency fluctuation: HUBER+SUHNER conducts a large part of our business in Swiss francs. With the strong Swiss franc, the currency currently trades at a premium. Foreign exchange accounting is one important measure to hedge against these risks related to currency fluctuations.

Exposure to geopolitical conflicts: Unstable global geopolitical situations threaten global supply chains and operations. As a risk mitigation measure, we closely monitor regulatory and political developments in relevant countries and adjust our sales and procurement strategy in line with these developments.

Non-compliance with internal and external standards: Growing compliance requirements present an increasing challenge for multinational companies operating in an environment of unprecedented complexity. In particular, the area of trade, compliance, tax, and transfer pricing has grown in complexity in the past year. To mitigate this risk, HUBER+SUHNER follows stringent processes to determine and monitor adequate transfer pricing and tax risks and maintains a compliance programme that ensures constant monitoring of relevant regulations and continuous education of our employees.

Serial defects: Serial defects of products may occur because of design and/or manufacturing flaws; Such defects can lead to exhaustive dismantling and replacement actions and – in the event of safety concerns – to product recalls. To mitigate this risk, we maintain a quality-centric mentality at HUBER+SUHNER and implement processes accordingly.

Worldwide pandemic: The Covid-19 pandemic led to global business disruptions and supply chain shortages. Although the actual risk of a pandemic is judged moderate at this time, a potential risk remains. Lessons learned from the Covid-19 pandemic and a comprehensive pandemic plan increase our resilience to confront potentially emerging health crisis.

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