Risk management

SCA’s structure and value chain

SCA’s structure and geographically dispersed business entails in itself a certain degree of risk reduction. SCA conducts operations in four business areas that deliver to entirely, or partially, different customer segments and end-users. The various businesses are also affected to a somewhat different degree by the business cycle and general economic prosperity.

The competitive situation also varies for the different businesses. SCA’s products are sold through many different channels and distribution paths.

The operation has a large geographical spread. Sales are conducted in more than 100 countries and manufacturing is pursued at about 250 production units in some 40 countries. Sales are often based on local manufacturing.

SCA’s structure also means that the raw material flows are, to a certain degree, integrated – from forest land to the finished consumer products. SCA is also a major player in the recovered fibre market.

Processes for risk management

SCA’s Board determines the Group’s strategic direction based on recommendations from Corporate Senior Management. The responsibility for long-term and overall management of strategic risks follows the company’s delegation scheme, from the Board to the President, and from the President to the Business Group Presidents. This means that most operational risks are managed by SCA’s business groups at a local level.

The financial risks are managed in accordance with the Group’s finance policy.

SCA’s financial risk management is centralised, as is the case for the corporate internal bank for  financial transactions of Group companies and management of the Group’s energy risks. The financial risks are managed in accordance with the Group’s finance policy, which is approved by SCA’s Board and, together with SCA’s energy risk policy, comprises a framework for management activities. The risks are grouped and followed up on a regular basis to ensure compliance with these guidelines. SCA has also centralised the management of other risks. SCA has established a corporate internal audit unit, which ensures that the organisation complies with the Group’s policies.

Risks and risk management

The most significant risks that impact SCA’s ability to achieve established targets are the following:

GDP trend and economic conditions, Environmental impact and climate change, Impact of political decisions, Changes in behaviour and attitudes of customers and consumers, Dependence on major customers and distributors, Expansion into new markets, Movements in the market price for SCA's products, Risks at plants, Suppliers, Cost of input Goods, Employee-related risks, Energy-price risk, Currency risk (transaction exposure), Currency risks (translation exposure), Credit risk, Liquidity and refinancing risk, Interest-rate risk.

For more detailed information about the risks together with a description of how these risks are managed, please click the link.