Risk management

Kojamo’s risk management is based on the Company’s risk management and treasury policy, corporate governance and Code of Conduct as well as the the risk assessments carried out in connection with the strategy and annual planning process. Risk management is part of the Company’s internal control, its purpose being to ensure that the Company achieves its business objectives.

The role of risk management is to identify, classify, analyse and manage central risks associated with the operations. The aim is to ensure the achievement of the goals related to the Company’s financial performance, customers and personnel.

Responsibility for the organisation of risk management and the risk management policy rests with the Board of Directors. Risk management is based on the risk assessments carried out during the strategy and annual planning process, which involve identifying key risks, evaluating their likelihood and potential impacts, and defining the means to manage them. Any significant changes in risks associated with the operations and the business environment are evaluated regularly and reported to the Audit Committee and the Board of Directors as part of quarterly interim reporting.

Read more about Kojamo’s near-term risks.

Kojamo’s most significant risks and their management

Risk	Causes of the risk and consequences	Managing the rik
Strategic risks
Decrease in apartment values	• Due to the weak economic situation or inflation and rising interest rates, the volumes of housing sales and portfolio transactions decrease, housing prices decrease, and yield requirements increase	• Active long-term portfolio management based on urbanisation and population growth • Active asset management in improving cash flows and managing costs in order to defend values
Renting apartments becomes more difficult due to the oversupply of rental apartments	• Investments in new rental apartments • Measures by society and cities do not result in the right type of apartments • The rents of the property are priced above the market rent level • Temporary disturbances in urbanisation	• Long-term outlook for rental property investments is positive • In the short term, determined letting efforts and dynamic pricing for apartments
Reform of housing and rent legislation	• General changes in housing or specifically in rent legislation • Significant changes in the housing allowance system which will, in some cases, lead to a decrease of general housing allowance but also to a total cut-off from owneroccupied homes • The net value of assets and debts would affect the amount of the housing allowance. Changes may impact on students’ position • Restrictions on rent and letting	• Active following and contributing to the legislation process
Demand for rental housing declines	• Continuation of urbanisation and immigration development • Segregation within operational locations • Popularity of home ownership increases from the current level	• Focus on cities where the share of rental housing is highest and growing
Planned divestments are not realised	• Mismatch between what company wants to sell and what is the demand in the market • The volume of planned exits versus market liquidity which leads to the inability to sell and to reduce debt as well as may impact credit rating, or may reduce investing in existing properties	• Systematic approach and monitoring of sales processes • Several ongoing sales processes with different risk profiles • Realistic sales targets • Capital recycling • Acceptance to sell at market terms with potential writedowns
Climate change: Transition risk	Risks related to the transition to a low-carbon society: • Increasing regulation; the company is unable to meet the requirements arising from tightened legislation • Increasing investment requirements • Shifting market preferences • Cost of indirect emissions • Technological risks • Market risks	• Active following of the EU and national legislation (especially the Energy Efficiency of Buildings Directive) to include new requirements in the planning process in early stage • Implementing the sustainability programme and aiming to meet the net zero target by 2030
Failure to take advantage of the opportunities presented by digitalisation	• Unable to identify the opportunities of digitalisation to ensure competitiveness • Unable to realise the benefits enabled by digitalisation • Failing to commercialise services • Unable to get partners involved in developing services • Organisational capabilities/operating methods do not meet the requirements of digitalisation • Current technological solutions do not support digital development • User training for digital solutions is not consistent	• Continuous identification and planning of the possibilities to develop processes and services • Monitoring the digital landscape regularly and adapting new methods • Encouraging collaboration between different departments to ensure a holistic approach to digitalisation • Implementing automation and AI technologies to streamline processes and improve efficiency
National economy is not growing	• The global/euro area economic situation is weakening • International financial markets are uncertain • Customers’ ability to pay is declining	• Efficient credit control and debt collection processes
Financial risks
Decreased availability of capital	• Due to banking regulation and/or the domestic or international economic situation, the availability of financing weakens • Market disruptions	• Diversifying the financing sources and financial instruments in the loan portfolio • Diversifying the maturities of loans • Maintaining a strong balance sheet structure
Increase in market interest rates	• Significant changes in market interest rates, interest margins and spreads • Changes can be caused by the market or the acceleration of inflation	• Loan portfolio is managed by dividing loans between fixed and floating rate loans, by different interest rate renewal periods and by the using interest rate derivatives • In accordance with Kojamo Group’s Treasury policy, the target hedging ratio is 50–100 per cent
Loss of investment grade credit rating	• Deterioration of the market situation • Deterioration of key performance indicators, in particular coverage ratio, LTV and liquidity	• Proactive measures to maintain key performance indicators, i.e. cost efficiency in operations • Measures refraining from investments, and sale of properties • Early financing and capital raising
Other risks
Data security and cyber security	• The information systems that are the most critical for the Group’s operations are not available • Data integrity issues • Wide impact incidents or disruptions in the information systems • Cyber security threats in IT services • Possible human errors	• Regular monitoring and surveillance • Keeping IT services up to date • Educating personnel on cyber security • Information security requirements for IT vendors • IT service management related best practices • Cyber insurance
Fires, water damage and vandalism on properties	• Fires and water damage • Equipment failures caused by the property’s equipment • Outdated or defective water pipes • Water damage or fire damage caused by construction defects • Consequences of power cuts	• Systematic maintenance and repair activities • Operating guidelines and models • Appropriate proactive safety efforts • Property insurance – full value insurance
Privacy	• Personal data (customer, personnel, stakeholders) is collected, stored or otherwise processed against the principles of data protection legislation (such as GDPR) and internal instructions • The rights guaranteed by legislation (such as GDPR) for data subjects are not followed • Accountability cannot be demonstrated	• Reminders and updates of guidelines • System access rights • Signature rights • Automated personal data removal intervals in systems
Physical and digital product quality does not meet the customer needs (demand)	• The quality of the physical product does not match the quality of the competitors’ products in some micro-markets • Online services require continuous development, including the underlying technology	• Understanding customer needs and market offering • Developing product quality according to strategy

Page updated 24 February 2025