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Risk management

Enterprise Risk Management is an integral part of doing business in Chr. Hansen. The objective of ERM is to support the achievement of our NATURE’S NO. 1™– Sustainably strategy, while managing risks appropriately

Executing NATURE’S NO. 1™– Sustainably strategy requires a shared understanding of the key risks and the overall level of risk exposure throughout the organization. 

The risk management process supports a healthy balance between risk and return in the Chr. Hansen business model. Therefore, for Chr. Hansen, ERM is not about risk aversion but about ensuring risk awareness and that adequate control and mitigations are in place. 

Each enterprise risk is assessed in terms of six impact drivers: Safety, Compliance, Financial, Business Interruption, Environment, and Brand & Reputation. The risk is assessed in respect of the likelihood of the impact materializing. 

The Company operates a three-tier risk system ensuring clarity and transparency in which risks are reported to the Executive Board and the Board of Directors, allowing them to ensure that the right risk mitigation strategy is adopted. Tier 1 risks, the most significant risks, are reported to the Board of Directors. Tier 2 risks are managed by the Executive Board, while Tier 3 risks are managed locally by the respective leadership teams.
 

To support the risk review processes, risk workshops are held with each production plant and respective business units. This exercise has led to the further development of the Company’s business continuity set-up which is a core mitigation component.


To achieve clear risk ownership and an embedded risk culture within the Company, Risk Champs have been appointed for each business unit. The purpose of Risk Champs is to facilitate risk management discussions locally and support the risk review processes, enabling decentralized risk structure and management where appropriate. 

The Executive Board and the Board of Directors maintain a strong focus on ERM to ensure that risk management is an integral part of the decision-making process. 

The Audit Committee reviews the effectiveness of the Company’s risk management throughout the year. 

The key risks may be divided into four categories:

  • Production, products and IP rights
  • Customers, partners and markets
  • Employees 
  • Structural risks (legal, finance and IT)

The following list of risk that could ultimately affect the Company is not exhaustive.

 

Product

  • Risk of production breakdown due to contamination or breakdown of production equipment, fire, terrorism or natural disaster 
  • Dependency on IT systems and infrastructure & cyber attacks
  • Product retrievals related to food safety  

Technology

  • Human capital risks
  • Intellectual property risk

Customers and partners

  • Dependency on individual customers
  • Reliance on partners in key areas where Chr. Hansen does not possess required key competencies

Markets

  • Changes in competitive landscape 
  • Trade restrictions
  • Geopolitical uncertainties and unrest
  • Tax and transfer pricing risk
  • Legal risks
  • Financial risks including currency, liquidity, interest rate, and credit risk
  

For further details on the risk categories and an update on 2018/19 developments, please refer to our Risk Management Report on pages 25-27 of the Annual Report 2018/19

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