Risk management

The target of risk management is to collect information on and to review and manage opportunities, threats and risks arising in the company’s operations in order that the company can reach its targets and carry out its operations without disruptions.

A risk can be defined as a matter or event that may, when realised, prevent or hinder the company to meet its strategic and operational targets, or result in missing business opportunities. Risks are classified as business risks (strategic risks), operational risks, risks of losses or damages and financial risks. Also other aspects than financial impacts are considered when assessing risks.

Musti Group’s Risk Management Policy describes the targets, principles, organisation, responsibilities and practices of Musti Group’s risk management. Risk management is a part of the internal control. The execution of the Risk Management Policy is monitored by the company’s top executive management and the Board of Directors.

Responsibilities

Under the Limited Liability Companies Act, the Board of Directors shall see to the administration of the Company and the appropriate organisation of its operations. In addition, the Board of Directors shall monitor and review the efficiency of the company’s internal control and risk management system. The Board of Directors shall confirm the company’s internal control and risk management policies and amendments to them, as well as address significant risks and uncertainties related to the company’s operations.

The Company’s CEO with the assistance of the Group’s Management is responsible for the preparation of the Risk Management Policy and the systematic and appropriate implementation of the risk management. The CEO shall ensure appropriate coverage of the Company’s risk management and assess the implementation of the risk management. The CEO reports on the risk management to the Company’s Board of Directors. The members of the Management Team are responsible for the planning, implementation and follow-up of the risk management measures in their own area.

Risks and uncertainties

As published in the Interim Report 1 October–31 December 2019

Musti’s risk profile follows the general risk level of the retail and grocery trade. The industry is not particularly cyclical and not subject to rapid changes. The company regularly monitors changes in the risks and their impact on the business. The company implements risk management continuously and systematically according to a scheduled process. The risk management process ensures that risks related to the Group are identified, estimated and controlled in a proactive way and the management of risks is monitored. The company’s risk management includes, among others: identification and review of risks, risk assessment, determining and implementing control measures for the identified risks, and monitoring and reporting of risks.

The most material risks to Musti’s business, results of operations, financial position and future prospects are risks related to macroeconomic developments, Musti’s operations and business activities, the pet products and services industry, IT systems and intellectual property, management and employees, compliance, taxes as well as certain financial risks.

Musti’s net sales and operating profit are impacted by general economic conditions. As the company’s net sales and operating profits are generated in Finland, Sweden and Norway, the company is vulnerable to negative economic developments in these core markets. Although the pet care market has proven to be resilient to economic downturns in the past, this may not be the case in the future.

Particularly due to the recent market fluctuations, the company is exposed to potential increases in its costs of financing in the event of fluctuating interest rates. The fact that a significant share of the company’s purchases is made in US dollars and British pounds also exposes Musti to risks related to fluctuating currency exchange rates. The foreign exchange fluctuations of these currencies are however partly hedged by foreign exchange forwards.

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