Essity is an international group with sales in approximately 150 countries and manufacturing at about 90 production facilities in some 30 countries. The geographic structure means that operations are conducted in countries and in markets with different cultures and varying degrees of maturity. Essity is exposed to a number of strategic, operational and financial risks, which could exert a negative impact on the Group’s operations. Accordingly, it is of major importance that the company has a systematic and effective process to identify, manage and mitigate the effects of these risks.
The responsibility for the management of risks follows the company’s delegation scheme, from the Board of Directors to the President, and from the President to each Business Unit President. The delegation scheme involves risks being managed primarily by Essity’s business units, but with clear central coordination and follow-up. The latter is mainly achieved through the business units’ continuous reporting and in the annual strategy process.
Risk identification and risk management are a key part of the annual strategy process, where risks are analyzed based on how they impact Essity’s opportunities to achieve established targets. Identified risks are assessed according to the likelihood of these becoming a reality and the potential impact each risk could have on the Group. This process also includes specifying who is responsible for managing the risk, and measures for how risks shall be mitigated and followed up. Responsibility and follow-up for the majority of risks are centralized at a global level.
Essity’s financial risk management is centralized. The Group’s internal bank handles the Group’s financial risks and energy risks. The financial risks are managed in accordance with the Group’s finance policy, which is adopted by Essity’s Board of Directors. Together with Essity’s energy risk policy, the finance policy constitutes a framework for financial risk management. The risks are compiled and continuously monitored. Responsibility for insurable operational risks is managed by the Group Risk Management & Insurance department. Risks related to ethics, human rights and other sustainability risks as well as information security are aggregated and monitored on a regular basis at Group level.
Essity has a corporate internal audit unit, which follows up that Essity’s organization complies with the adopted policies.