Risk management

Kojamo’s risk management is based on the Company’s risk management and treasury policy, ethical guidelines and the risk assessments carried out during 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 Definition Means of management (not limited to the following)
Risks related to operating environment
General operating environment A risk of the company’s operating conditions weakening due to a decline in the general economic situation or a slowdown in urbanisation. – Monitoring and analysing the general operating environment – Regular risk evaluations – Adjusting operations to changes in the operating environment – Diversifying investments – Strong balance sheet structure
Legislation and other regulations A risk of new regulations affecting the company’s operating conditions and profitability – Monitoring the preparation of laws – Active dialogue with legislators – Preparing for changes – Training personnel
New projects A risk of not being able to start new projects profitably due to a rise in construction costs, lack of suitable land for construction, lack of offers or changes in regulations. Growing demand can also create a risk – Efficient plot procurement – Planning control – Ensuring the efficiency of project development – Ensuring the efficiency of plans – Cooperation with partners – Confirming the accuracy of level of profit
Financial risks
Availability of capital A risk of the availability of capital or financing deteriorating due to bank regulation and/or decline in domestic or international economic situation or capital market. – Strong balance sheet structure – Diverse financing sources – Balanced maturity distribution – Diverse financial instruments
Interest rate risk A risk of significant changes in fluctuating market interest rates and/or margins decreasing the company’s profitability. – Strong balance sheet structure – High interest rate risk hedging ratio – Balanced maturity distribution
Business related risks
Renting apartments A risk of apartments not matching demand due to location or quality, or services not meeting the customers’ needs. – Monitoring and analysing the operating environment – Regular risk evaluation – Adjusting operations to changes in the operating environment – Cooperation with customers and service providers – Managing changes in properties – Renovations and modernisations – Collecting customer information and reacting to customer feedback
Asset value A risk of apartments’ comparable market values decreasing due to a weak economic situation or regional demand/supply factors. – Monitoring and analysing the operating environment – Regular risk evaluation – Diversifying investments – Strong balance sheet structure – Renovations and modernisations
Efficiency of operations A risk of operations not being efficient, wrong things being done or things being done incoherently or change management not being appropriately executed. Company’s insufficient competences can also create a risk. – Management system – Developing processes actively – Operating instructions – Managing partnership network – Controller operations – Developing the corporate culture, competence mapping and developing personnel
Network and partnership management A risk of the network or partnership management not achieving the goals set for partners or partnership. – Command of contract law – Operating model for anti-grey economy – Selection and tendering of partners, requirements for partners – Operating model for partner control
Reporting, operations and responsibility of a listed company A risk of financial and operative reporting not providing accurate and sufficient information for the management of operations or decision-making, or the company’s operations not fulfilling the requirements set for a listed company. Failing to fulfil responsibility requirements can also create a risk. – Instructions, operating principles, operating policies, process descriptions, ethical principles and models – Technical abilities and competence – Audits – Analysing financial reports systematically – Corporate Governance Code
Legal risks A risk of defective and faulty documents not achieving the intended legal result. – Ensuring legal competence – Maintaining standard documents and providing personnel training – Sufficient legal resources – Utilising external consultants
Liability and data security risks as well as crime and injury risks A risk of properties, their contents or persons being damaged or injured due to e.g. fire, water damage or vandalism, the company or personnel becoming victims of a crime or accidents occurring. Attempt to misuse the company’s systems or data can also create a risk – Systematic maintenance and renovations – Operating instructions and models as well as auditing – Appropriate preventive security work – Programmatic and technical security systems – Insurances

Page updated 26 July 2019