Strategic And Operational Risk Management
Risk - Customers
HEXPOL conducts operations in a large number of geographic markets and offers products to a considerable number of customer categories. One major customer group comprises system suppliers to the automotive industry. A decline or weak trend in the automotive industry could have a negative impact on HEXPOL’s operations. This customer group could thus
entail certain risks for HEXPOL. If HEXPOL’s customers fail to fulfil their obligations, or drastically reduce or cease their operations, the Group’s operations could be adversely impacted.
Risk management
HEXPOL has a favourable risk diversification in terms of geographical areas and customer groups. No single customer accounts for more than 10 percent of the Group’s sales.
Risk - Products
If HEXPOL’s products do not meet customer requirements, complaints and recalls may occur.
Risk management
HEXPOL uses quality systems to ensure that the product complies with specified requirements.
Risk - Suppliers
HEXPOL’s products consist of many different raw materials from several different suppliers. To be able to manufacture, sell and deliver products, HEXPOL depends on externally supplied goods meeting agreed requirements with respect to factors such as quantity, quality and delivery time.
Risk management
HEXPOL has a favourable risk diversification in terms of suppliers and the Group is not, to any significant extent, dependent on any single supplier.
Risk - Key personnel
If key individuals leave and successors cannot be recruited or if HEXPOL is unable to attract qualified personnel, this could have a negative impact on the Group’s operations.
Risk management
HEXPOL’s future success largely depends on its ability to recruit, retain and develop the Group’s employees. HEXPOL strives to be an attractive employer and encourages internal recruitment.
Risk - Production disruptions
Damage to production facilities caused, for example, by fire, flood, mechanical damage, natural disaster, can lead to interruption of business and affect customer deliveries.
Risk management
HEXPOL has many units which gives certain flexibility in terms of supporting production. HEXPOL works regularly on risk prevention.
Risk - Raw material
HEXPOL depends on a significant number of input materials, primarily plastics and rubber raw materials. Trends in the market may result in higher purchasing prices for input materials that are crucial for HEXPOL. In view of the competitive situation, there is a risk that HEXPOL cannot raise prices sufficiently to fully offset the increased costs, leading to reduced margins.
Risk management
To meet the increased costs for input materials, HEXPOL works, among other things, to improve production efficiency, developing more cost-effective processes and holding monthly price negotiations.
Risk - Cyberattack risk
HEXPOL uses modern IT infrastructure for communications and business support. Disruptions in these systems can have a negative effect on oper-ations, both in terms of marketing activities and production. Cyberattacks and misuse of data can also lead to personal data and intangible assets falling into the wrong hands.
Risk management
HEXPOL takes IT security and cyberattack risks very seriously and continuously assesses the reliability and weaknesses of the company’s security systems. All HEXPOL units are covered by the Group’s IT policy, which clearly states what requirements apply. Compliance with the above-mentioned policy is audited annually by the Group’s auditors to a certain extent, but mainly by representatives of the IT organization.
