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 riskRisk management methods (the information is not exhaustive)
Operating environment risks
General operating environment A The risk of the company’s operating conditions deteriorating due to a decline in the general economic climate or the slowing down of the trend of urbanisation.• Monitoring and analysing the operating environment
• Regular risk assessments
• Adapting operations to changes in the operating environment
• Diversification of investments
• Strong balance sheet structure
Legislation and other regulationThe risk of new regulations affecting the company’s operating conditions and profitability.• Monitoring legislative processes
• Organisations’ working groups, e.g. the Finnish Association of Building Owners and Construction Clients (RAKLI)
• Active dialogue with legislators
• Preparing for and anticipating changes
• Training employees
New projects The risk of not getting new projects started profitably due to higher construction costs, a lack of land suitable for construction, a lack of tenders or changes in regulations. The risk can also arise through growing supply.• Design management
• Ensuring the efficiency of project development
• Ensuring the efficiency of plans and designs
• Cooperation with partners
• Ensuring the correct yield level
Financial risks
Availability of capitalThe risk of lower availability of capital or financing due to banking regulations and/or the domestic or international economic situation or a decline of the capital markets.• Strong balance sheet structure
• Diverse sources of financing
• Balanced distribution of loan maturities
• Diverse financial instruments
Rising market interest ratesThe risk of significant changes in variable market interest rates and/or margins having a negative impact on the company’s profitability, or of increased demand for revenue or financing due to the market or the acceleration of inflation.• Strong balance sheet structure
• High interest rate risk hedging ratio
• Balanced distribution of loan maturities
Risks related to business operations
Rental operations The risk of apartments not matching demand in
terms of location or quality, or services not matching
customer needs.
• Monitoring and analysing the operating environment
• Regular risk assessments
• Adapting operations to changes in the operating environment
• Cooperation with customers and service providers
• Management of changes concerning properties
• Repairs and modernisation projects
• Collecting customer information and reacting to customer feedback
Value of assetsThe risk of the value of the property assets declining
due to lower investment demand and subsequently
rising yield requirements.
• Monitoring and analysing the operating environment
• Regular risk assessments
• Diversification of investments
• Strong balance sheet structure
• Repairs and modernisation projects
Operational efficiencyThe risk that operations are not efficient, doing the
wrong things, doing things inconsistently or otherwise failing to engage in change management in the
appropriate manner. The risk may also arise from the company not having the sufficient competencies.
• Management system
• Active process development
• Operating guidelines
• Managing the partner network
• Controller activities
• Developing the corporate culture, competence surveys and personnel
Network and partner cooperationThe risk of the network and partner cooperation not achieving the targets set for partners and cooperation. • Management of the legal aspects of contracts
• Anti-grey economy operating model
• Selection and tendering of partners, requirements for partners
• Operating model for the monitoring of cooperation partners
Reporting, the operations of a listed company and responsibilityThe risk of the Group’s financial, operational and sustainability reporting not providing accurate and adequate information for the steering of operations and decision-making, or that the Group’s operations do not fulfil the requirements set for listed companies. Risk can also arise from the Group not fulfilling the requirements concerning responsibility. • Guidelines, operating principles, operating policies, process descriptions, training and models
• Technical competencies and expertise
• Auditing
• Systematic analysis of financial reports
• Corporate Governance Code
• Implementation of the sustainability programme
• Transparent and comprehensive sustainability reporting
• Reporting has been validated by an independent third party
Legal risks The risk of incomplete or erroneous documentation
failing to achieve the intended legal outcome.
• Ensuring legal competence
• Maintaining standardised documentation and ensuring the appropriate
training of personnel
• Adequate legal resources
• Using external advisers
Damage and information security risks, crime risks and accident risks The risk of real estate, movable property or people suffering damage due to a fire, water damage, vandalism or other such circumstances, the company or its personnel being the victim of a crime, or the occurrence of accidents. The risk of attempted abuse of the company’s systems or data, or failure of the GDPR practices related to the collection of customer data.• Systematic maintenance and repair activities
• Operating guidelines and models, auditing
• Appropriate proactive safety efforts
• Increasing automation
• Programmatic and technical security systems
• Insurances
• Data life cycle and risk management
Risks caused by climate changeThe physical risk of an increase in extreme weather phenomena caused by climate change and the higher costs associated with mitigating their impacts. Physical risks include, for example, floods, heavy rains, storms and temperature fluctuations.

Technological, legal and market-related risks of stricter regulations resulting from climate change related to energy-efficient and low-carbon construction and apartments not corresponding to the required standards.

Reputation risk resulting from climate change if the
Group fails in its actions aimed at mitigating climate
• Assessing flood-prone areas as part of due diligence processes and investment decisions regarding new construction
• Taking extreme weather phenomena into account in maintenance management and insurance-related matters
• Actively monitoring changes in EU regulations and national legislation
• Measures to increase energy efficiency.
• Sustainability programme and carbonneutral energy consumption roadmap
• Improving stakeholder awareness by increasing the frequency and regularity of
sustainability-related communications.
Material, personnel and rental income risks related to property maintenanceThe risk of the monitoring and operating processes related to the condition and structures of properties being inadequate or the repair volume and maintenance processes being insufficient.• Proactive maintenance, ensuring adequate technical capacity, competence and processes
• Adequate condition assessments, surveys and monitoring.
• Assessing the property portfolio’s longterm repair needs
• Defining crisis communication practices and operating models for exceptional situations

Page updated 23 March 2022