Saab 2012 Annual Report Download - page 56

52 SAAB ANNUAL REPORT 2012
ADMINISTRATION REPORT > RISK AND RISK MANAGEMENT
RISKS AND RISK MANAGEMENT
Saab’s business generally entails signicant
investments, long periods of time and prod-
uct development or renement. In addition
to customer and supplier relations, interna-
tional operations involve joint ventures and
other collaborations as well as the estab-
lishment of operations abroad.
All businesses entail risk. A risk can be specic to the company or
related to a certain industry or market. Certain risks can be fully
managed by the company, while others are out of its control.
Saab’s operations primarily involve the development, pro-
duction and supply of technologically advanced hardware and
software to customers around the world. The international part of
the business is growing.
Operations entail signicant risk-taking in various respects. The
key risk areas are political, nancial and operational risks. See
this spread for information on the political and nancial risks. See
pages 53–55 for more information on the operating risks.
Managing risks
Signicant risks that are identied are managed continuously at all
levels of the organisation and in strategic planning. Various poli-
cies and instruments govern the management of signicant risks.
In addition, Saab has an independent audit unit that serves as a
dedicated resource to independently audit the effectiveness of
internal control processes. Risks are also managed by procuring
insurance. Saab has a Group-wide programme where insurance
is obtained on the market or through the Group’s own insurer,
Lansen Försäkrings AB.
Risk analysis and activities 2012
In 2012, we worked on training and following up the introduction
of the harmonised risk evaluation process implemented in 2011.
Focus has been on the operating processes and project execu-
tion. In 2013, risk management will be expanded to other areas
within line operations and support processes. The process is
designed based on a 2010 analysis of various aspects of the risk
processes used by the business areas and divisions.
For additional information, see the corporate governance report,
pages 124–133.
Political and market risks
Saab supplies, among other things, systems and equipment that
are classied as strategic products, the sale of which is regulated
by national laws and ordinances that also include international
agreements. Access to vital components and systems may be
subject to export restrictions and various types of regulations,
which are exposed to political risks .
Regulations are amended on an ongoing basis, and this im-
pacts Saab’s business opportunities. The ability to establish and
maintain long-term customer relationships is a key issue for Saab,
as some projects extend over decades. Because the Swedish
state – through the Armed Forces and FMV – has traditionally
accounted for a large proportion of Saab’s product renewal, our
business is particularly affected by Sweden’s defence policy.
Another type of risk are market risks that can affect custom-
ers’ inability to full current contracts due to economic, political
or other circumstances such as natural disasters, an economic
crisis, a shift in power or an embargo.
Managing political and market risks
Saab manages political and market risks through various types of
export guarantees, insurance solutions and other instruments. It
is impossible, however, to avoid losing business opportunities or
incurring damage if political and market risks are realised.
Financial risks
In its operations, Saab is exposed to various nancial risks. Man-
agement of nancial risks is governed by the Group Treasury Pol-
icy established by the Board of Directors. Moreover, Saab has an
extensive pension obligation managed by Saab’s Pension Fund.
In addition, detailed directives and processes are in place for the
operational management of each area. Overarching responsibility
for managing nancial risks lies with Group Treasury.
Pension obligations
The Group’s pension obligations are substantial, as indicated in
Note37. In the calculation of pension obligations, future pension
obligations are discounted to present value. The size of the liability
is dependent on the choice of discount rate: a low interest rate
produces a high liability, and vice versa.
Management of pension liability
To manage the pension liability, the Saab Pension Fund was estab-
lished in 2006 and capitalised with the corresponding PRI liability.
2011
Design and implementation of a
harmonised risk management pro-
cess throughout the company.
2012
Training, follow-up and completed in-
troduction of the harmonised risk man-
agement process. Making the product
development process more efcient.
2013
Understand the complexity and the
demands on our local markets and
provide education and follow-up on
contacts and relations.
FOCUS FOR RISK MANAGEMENT 2011–2013