Risk Management
The objective of Lassila & Tikanoja’s risk management is to identify significant risk factors, prepare for them, and manage them optimally.
Key Risk Management Principles
The objective of L&T’s risk management is to support management and decision-making in achieving the Company’s objectives. Comprehensive risk management aims to control the Group’s overall risk, not just individual risk factors.
At L&T, risk management is divided into three main categories:
- financial and funding risks,
- strategic risks, and
- operational risks.
Insurance is part of risk management, and its purpose is to avoid costs arising from loss events by transferring liability to the insurance company at the lowest possible premiums and to limit L&T’s maximum cost from such events to the amount of the deductible.
Identification, assessment and reporting of risks
Risk management is integrated as an essential part of L&T’s management, monitoring, and reporting.
Regular identification, monitoring, and reporting of risks take place at the Group, regional, and unit levels, as well as in centralized functions defined as critical.
Each designated area and centralized function identifies and assesses the most significant risks within its area of responsibility, prepares contingency plans, and assigns responsibility for risk management measures within its organization. Thus, risk identification and preparedness primarily occur in the business regions, and units responsible for operations. Observed risks, related contingency measures, and the scope of insurance coverage are reported regularly to L&T’s Executive Management Team and the President and CEO.
All regions, foreign units, and centralized functions defined as critical conduct for an annual risk assessment, evaluating strategic and financial risk factors as well as damage-related and operational risks.
The significance of risks is assessed using a risk matrix, and based on this, action and contingency plans are prepared for significant risks to ensure their management.
The principles of financial risk management are defined in the financial policy, which is the responsibility of the Group CFO.
Responsibilities
The principles of L&T’s risk management are approved by the company’s Board of Directors. The Board monitors the implementation of risk management and assesses the efficiency of the methods employed. The President and CEO is responsible for the organisation and implementation of risk management.
Risk management at L&T Group is controlled by the risk management policy confirmed by L&T’s Board of Directors. The policy specifies the objectives and principles, organisation and responsibilities and procedures of the Group’s risk management.
The Group’s financing policy confirmed by L&T’s Board of Directors is followed in the management of financial risks. The principles for insurance risk management are specified in the Insurance Policy.