Risk management
Purpose
The Rovio risk management policy defines the objectives and principles, organization, responsibilities and practices of risk management within Rovio.
Risk management objectives
Risk management is an important part of the Rovio Group business management and corporate governance. The objective of Rovio’s risk management is to support the whole organization in achieving its strategic, operational and financial targets. In order to meet the objectives Rovio has incorporated procedures to recognize, assess and manage risks and their consequences. The risk management objective is reached when the Group has identified the uncertainties, risks and opportunities related to the targets and is able to effectively assess and manage the risks.
Rovio enterprise risk management
Risk management principles
Risk management in Rovio aims at ensuring a Group wide risk recognition, assessment, management and control. Risk management is a part of the Rovio day-to-day decision making and operations. Risk management is handled both centrally and in business units to ensure efficiency and visibility across the organization. Key risks are regularly and systematically recognized, assessed and reported to the Board of Directors as a part of the business operations at a Group and business unit level.
Risk definition and risk categories
Rovio divides risks into external and internal risks and further into strategic, operational and financial risks.
Strategic risks are uncertainties mainly related to changes in Rovio’s operating environment and the ability to respond to these changes or to prepare for them. These can be related to e.g. changes in the macro-economic situation, legislative environment, technologies, consumer behaviors and competitive environment.
The target of assessing strategic risks and opportunities is to identify the measures that can and should be taken to achieve objectives by taking controllable risks. Failure in identifying or taking advantage of opportunities also constitutes a risk.
Operational risks are circumstances or events which can prevent or hinder the achievement of objectives or cause damage to people, property, business or information. The target is to avoid or reduce operational risks to an extent, where the cost of measures is in a reasonable proportion to the extent of the risk.
Financial risks are risks related to Rovio’s financial position. These include currency risk, liquidity and funding risk, interest rate risk, credits and counterparty risk. The management of financial risks is based on the Group's finance policy, confirmed by the Board of Directors. Risk assessments consider also other aspects than purely financial impacts. Reputational risks arise if Rovio’s operations are inconsistent with the expectations of different stakeholder groups, such as the end consumers for Rovio’s products, business partners or the general public. Preventing reputational risks requires compliance with Rovio's internal guidelines and corporate governance. The management of reputational risks relies especially on providing timely and right external communication.
The risks are further divided into group level and business unit (i.e. Games and Brand licensing) level risks.