Risk management is a part of management system

The purpose of risk management at Alma Media is, as a part of operations, to continuously evaluate and manage all possibilities, threats and risks present in business operations in order to reach the objectives set and to ensure continued operations.

Risk management is part of Alma Media’s financial reporting process and one of the key internal control procedures in the company. Risk management aims at recognising risks and limiting them to a commonly accepted level. Limits and procedures for risks are defined in writing in the risk management system of the Group.

The Board of Directors carries the principal responsibility for risk management. It discusses the most important risks recognised and determines the company’s risk appetite. The Audit Committee of the Board of Directors approves the risk management principles of the corporation and evaluates the efficiency of the risk management systems. In addition, the committee discusses the management’s reports of significant risks and exposure to them as well as the plans for minimising the risks.

The CEO, the Group Executive Team and other managers in the Group at all organisational levels are responsible for carrying out daily risk management. In each business unit, a member of the unit’s executive group, usually the person in charge of the finances of the unit, is appointed as responsible for risk management and reporting of risk management operations.

This annual review discusses the main points of Alma Media’s risk management. For additional information, please see www.almamedia.fi/risk_management.

Significant risks and uncertainties

Alma Media categorises the risks affecting its business into strategic, operative and financial risks.

Strategic risks

The most important strategic risks for Alma Media are a significant drop in readership, a decrease in advertising sales and a significant rise in distribution costs. Changes in the overall economy are reflected in the development of advertising sales. Advertising sales generates approximately half of the Group revenue. There are also country-specific risks related to the development of the market and the economic growth with regards to developing businesses abroad, such as in the Baltic countries and other Eastern European countries.

In the long term, the media business is transforming with changes in media usage and new technologies. Alma Media’s strategic objective is to react to this challenge by renewing its business and developing new businesses in the field of web media.

Operative risks

Disturbances of information technology and communications as well as disruption of printing are the most important operative risks. The risks of information technology and communications are reviewed and managed in cooperation with the group’s ICT organisation and the business units as well as cooperation partners. Especially the technical operation and vulnerability of the digital business is closely monitored in the entire business.

In printing, it is important to prevent disruptions of operations in advance by means of good management and safety culture as well as with the help of guidelines. Back-up printing plans are made in preparation for interruptions.

The entry into force of the new Postal Act may lead to additional costs for the distribution of newspapers. Therefore, the Group aims to further improve the efficiency of its distribution activities in order to maintain a competitive edge. On the other hand, the amended act also offers Alma Media a possibility to expand its distribution business.

Financial risks

The Chief Financial Officer of the Group is responsible for the Group’s financing. Alma Media’s centralised financing and investment function takes care of the operative financing of all companies in the Group. The function includes the management of payments and liquidity, funding and investments. The Group’s payments are centralised.

Capital market arrangements are used for long-term financing. The cash surplus is invested according to the Group’s financing policy in financially sound investment instruments with a maturity of less than one year.

Alma Media has no significant financing risks. The financing risks are described in more detail in the Financial review, Appendix 28 to the Financial statements.