Risk Management
Risks are a natural part of all business operations that the organization must be able to manage effectively. Every year Eniro conducts a risk analysis that provides input for the annual business plan, where risk management activities are planned as a part of the strategic and operational initiatives adopted.
Eniro has an annual risk analysis process, Enterprise Risk Management (ERM), which includes all parts of the business, subsidiaries as well as Group functions.
Eniro’s goal is to identify, assess and manage the risks it faces including:
The risk analysis identifies the different risks in a structured manner by analyzing a number of risk drivers per risk category. An assessment is made for each evaluated risk to determine to what extent the risk should be accepted, monitored, reduced or eliminated. The risk exposure is to a great extent similar between the various operating business areas in the Group.
The risk analysis also provides input for the annual business plan, where risk management activities are planned as a part of the strategic and operational initiatives adopted.
Risks that affect the Group’s net income
Identified risks within industry and market-related risks:
- Technology development
- Macro-economic factors
- Customer behavior
- Competition
The search market is growing rapidly, with continuous technological developments and the introduction of new market players, as well as expanded, or in certain cases, completely new products and services. In order to meet the needs of its customers and consumers, Eniro must be highly adaptable, have a good dialog with the customer, and have flexible product development and sales departments.
Eniro is constantly improving its products in order to remain on the cutting edge and meet the customers’ changing behaviors. New products and services are evaluated using test panels and surveys. Eniro is constantly expanding its knowledge in terms of user patterns, user needs and usability.
A new strategy was developed during 2008 that is intended to transform the company from print dependency to online opportunities which will strengthen the position on the market.
Identified risks within commercial risks:
- Products and services
- Pricing models
Eniro’s business model to offer advertisers valuable exposure requires competitive and accessible search channels with motivated users.
Changing user behaviour and shifting trends in terms of purchasing media space constitute significant risks, and therefore, Eniro is focusing on continuously increasing its understanding of users’ purchases and demonstrating the value of advertising to its advertisers.
Eniro is focused on ensuring a high level of quality in terms of the content of the services and ensuring that the high level of usage is maintained or increased, which can be done by developing services and content, market communication or through acquiring traffic.
Identified risks within operational risks:
Database- Product development
- Recruiting
Eniro offers search options for connecting buyers and sellers. This is possible through the database. The content of the database is relevant in order to be able to generate a high usage rate for the services, which in turn creates benefits for the advertisers. Eniro is constantly developing the content and ensuring a high level of reliability for the database.
The sales force is an important resource for Eniro and the company has focus on both keeping co-workers as well as recruiting new talents. Eniro has developed new recruiting sites on the web in some countries to create a dialogue with the labor market.
Eniro’s vision is to become one of the most attractive employers in the industry and offer competence development and competitive compensation terms for its employees.
Identified risks within financial risks:
- Funding
- Foreign currencies
- Interest rates
The Group’s common finance policy as established by the Board of Directors is the foundation for financial operations, delegation of responsibility and financial risk management. The focus of Eniro’s risk management is to reduce or eliminate financial risks, with consideration taken for costs, liquidity and financial position.
In addition to the annual risk analysis, financial risks are continuously assessed and monitored. For a detailed description of financial risk management, see special section on page 79 in Eniro’s Annual Report 2008.
Identified risks within compliance risks:
- Laws
- Regulations
- Internal policies
Changed laws, regulations and governmental decisions could result in changed prerequisites for the business and thus affect Eniro. The company has a well-established system for internal regulations and policies, which clearly regulates and determines how the operations should be managed in various respects.
Eniro regularly follows up its compliance with laws, regulations and internal policies – for example, through the activities of the internal audit, which includes monitoring of compliance risks.
Correct and objective financial reporting and sound internal controls are essential for the company’s credibility with respect to shareholders and other stakeholders. Eniro devotes considerable resources to the development of its processes for risk analysis and risk management in order to maintain good internal control of its financial reporting, in accordance with the intentions of the Swedish Code of Corporate Governance.
The risk of significant errors in the Company’s financial reporting is analyzed from the point of view of the consolidated income and balance sheet and notes in the annual report.
Key accounts are identified and a risk analysis carried out, in which both quantitative and qualitative risk parameters are assessed. For a detailed description of the company’s risk analysis and risk management activities with respect to its financial reporting, refer to the section on internal control over financial reporting in the Corporate Governance Report.
Last updated:2009-06-04