Saab 2013 Annual Report Download - page 55

SAAB ANNUAL REPORT 2013 51
ADMINISTRATION REPORT > RISKS AND RISK MANAGEMENT
RISKS AND RISK MANAGEMENT
Saab’s business generally entails signicant investments,
projects delivered over long periods of time, and high-
tech product development or renement. Operations
involve customer and supplier relationships, joint ventu-
res and other corporate alliances as well as Saab’s own
business activities in many countries.
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, production
and supply of technologically advanced hardware and soware to
customers around the world.
Our operations entail signicant risk-taking in various respects.
e key risk areas are political, nancial and operational risks. See
this spread for information on the political and nancial risks. See
pages 52–54 for more information on the operating risks.
Managing risks
Signicant identied risks are managed continuously at all levels
of the organisation and in strategic planning. Various guidelines,
policies and instruments govern the management of signicant
risks. In addition, Saab has an internal audit unit that serves as a
dedicated resource to independently audit the eectiveness of a
selection 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 2013
In 2013 we worked with training and following up the introduc-
tion of the harmonised risk evaluation process implemented
at Saab. Focus has been on the operating processes and project
execution. Risk management work was expanded in 2013, compa-
red to 2012, to cover additional areas within line operations and
support processes.
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 sub-
ject to export restrictions and various types of regulations, which
are exposed to political risks.
Regulations are amended on an ongoing basis, and this impacts
Saab’s business opportunities. e ability to establish and main-
tain 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 accoun-
ted for a large proportion of Saab’s product renewal, our business
is particularly aected by Sweden’s defence policy.
Another type of risk are market risks that can aect customers’
inability to full current contracts due to economic, political or
other circumstances such as natural disasters, an economic crisis,
a shi 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.
Management of nancial risks is governed by the Group Treasury
Policy established by the Board of Directors. Saab also has an
extensive pension obligation managed by Saab’s Pension Fund.
Detailed directives and processes are in place for the operational
management of each area. Overarching responsibility for mana-
ging nancial risks lies with Group Treasury.
Pension obligations
e 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. e size of the liabi-
lity is dependent on the choice of discount rate: a low interest rate
produces a high liability, and vice versa.
Management of pension liability
e predominant plan in Sweden is the  plan under collective
agreements adopted by the Confederation of Swedish Enterprise
and the Negotiation Cartel for Salaried Employees in the Private
Business Sector (). Saab Sweden has three dierent ways of se-
curing the dened-benet plans. ey are secured as liabilities in
the balance sheet, in pension funds or funded through insurance
with mainly Alecta. e Saab Pension Fund, that secured part of
the  plan, had assets of 4,595 (4,346) as of 31 December
2013, compared to an obligation of  5,793 (6,492) according
to 19, or a solvency margin of 79 per cent(67).
To manage the pension liability, the Saab Pension Fund was
established in 2006 and capitalised with the corresponding PRI
liability. e Group’s obligations are calculated on an actuarial
2012
Training, follow-up and completed in-
troduction of the harmonised risk man-
agement process. Efciency improve-
ments to the production development
process.
2013
Internal focus on increasing under-
standing of the requirements of local
markets. Also ongoing provision of
training for Saab employees and part-
ners about our anti-corruption work.
Also continuous improvement of the
overall risk assessment process.
2014
Continued implementation of meas-
ures to streamline development pro-
cesses, including through the use of
the product database that was intro-
duced in 2013. Strengthen our whistle-
blowing function and increase the
general security awareness among all
employees.
FOCUS FOR RISK MANAGEMENT 2012–2014