Risk management

The aim of Huhtanen Capital's risk management strategy is to recognise and observe the risks connected to our operations and to use that information to manage those risks in accordance with our risk management policies. Huhtanen Capital divides its risks into four main categories, which are presented below. 

1. Strategic risks

Strategic risks refer to events that impact our company's long term (strategic) objectives, and they are sometimes referred to as business risks. Our strategic risks are connected to uncertainty factors within the business environment, and may be both intrinsic, such as technology risks or external to the company, such as changes to client behaviour or amendments to legislation.

2 Financial risks

We consider financial risks to include the company's financial processes such as liquidity risks, interest rate risks and risks connected to the capital structure. A significant part of the risks facing our company are connected to the availability of funds, which is vital in the expansion phase of a company. An example of a hindrance related to the access to funding with unexpected financial impacts includes a negative economic shock complicating the availability of funds. We protect ourselves against financial risks with insurances, several different sources of financing and revolving credit facilities. We also use interest rate swaps to cover ourselves. 

3 Operative risks

Operative risks are related to our company’s daily activities and may be a consequence of insufficient or unsuccessful internal processes, poor management, personnel or external events. Operative risks may also be connected to the company's data systems, production processes and development projects. Characteristic to operative risks is their ability to trigger a serious crisis and, in a worst-case scenario, interrupt operations.

4 Hazard risks

These include risks to personnel's capacity to work, various environmental catastrophes and security risks at our premises. Hazard risks can also be called pure downside risks, because they only carry loss potential. Hazard risks are often externalised using, for example, insurances.

Risk management policies

Our risk management policies aim to recognise risks facing our company and classify them depending on their level of seriousness (minor, detrimental and serious). The Board of Directors evaluates in its monthly work the ramifications of risks and establishes suitable safeguarding strategies. Thus, the Board of Directors defines the probability of any recognised risk, which is then compared to the company's own risk rating. The higher the severity and probability of a risk, the more individualised safeguarding strategy is implemented.