Risk management
At Sulzer, risks are assessed regularly as part of the company’s integrated risk management process. The results are discussed with the management and the Audit Committee.
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Risk |
Risk exposure |
Main loss controls |
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External and markets |
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Market assessment |
Market developments that are assessed inappropriately could lead to missed business opportunities or losses. |
— Continuous monitoring and assessment of market developments |
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— Systematic midrange planning based on market developments and expectations |
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Geopolitical shocks |
A geopolitical shock event could have an impact on operations and travel. Also, it could imply currency risks and default risks of countries and banks. |
— Monitoring of exposure in critical countries |
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— Monitoring of debt situation of countries and banks |
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— Continuous monitoring of raw material prices and inflation indicators |
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— Sulzer’s global presence mitigates the effect of geopolitical shocks |
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Strategic |
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Innovation |
Failure in R&D and innovation activities could negatively impact the ability to operate and to grow the business. Insufficient investments in innovation to maintain technology leadership and develop innovative products. |
— A phased process, technical risk manageability assessments and key performance indicators to ensure quality of the development |
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— Product Development Council with strong focus on strategic plans and digitalization |
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— Prototypes and own test beds to test and validate products before market release |
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— Core Technology Council for research of basic technology |
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— Focus on innovation with strategic customers |
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— Innovation and ideation projects |
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— Implementation of an expert development program for key critical resources |
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Operational |
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Attraction and retention |
Failure to attract, retain and develop people could lead to a lack of critical skills and knowledge, which hinders both daily operations and growth potential. |
— Ensuring that Sulzer’s people and performance efforts are anchored to the company’s values and behaviors |
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— Ongoing feedback through employee opinion survey “Voice of Sulzer” |
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— Robust internal communications strategy |
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— Ongoing engagement in workshops and collaborative activities |
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— Visibility and access to creating development experiences and opportunities |
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— Consistent approach to salary grading and benchmarking |
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Health and safety |
An unsafe working environment could lead to harm to people, reputational damage, fines as well as liability claims and could have a serious economic impact. |
— Health and safety directives, guidelines, programs (e.g. Safe Behavior Program) and training |
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— OHSAS 18001 certifications |
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— Monthly health and safety controlling and regular audits |
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— Global network of health and safety officers |
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Environmental |
Environmental damage could lead to harm to people and nature, reputational damage, fines as well as liability claims and could have a serious economic impact. |
— Mitigation in comprehensive environmental due diligence (EDD) projects for acquisitions and divestitures |
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— Elimination of environmentally damaging substances through Prohibited Substances List |
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Compliance |
Non-compliant or unethical behavior could lead to reputational damage, fines and liability claims. |
— Active fostering of high ethical standards by tone from the top and middle management |
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— Continuous monitoring and assessment of potential exposures |
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— Sulzer Code of Business Conduct and a number of supporting regulations (e.g. anticorruption, antitrust, trade control) |
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— Third-party due diligence process |
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— Global network of compliance and trade compliance officers |
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— Compliance training (incl. e-learning) and audits |
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— Speak-up culture, compliance hotline and sanction checks |
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Quality of products and services |
Failure of high-quality products and services could lead to repeated work, reputational damage or liability claims. |
— Quality management and assurance systems tailored to specific businesses |
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— Third-party accreditation |
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— Competence development programs and training of employees |
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— Test centers |
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Business interruptions |
Business interruption, such as a fire, could cause damage to people, property and equipment. It could have a negative effect on the ability to operate at the affected site. Security incidents could impact the IT infrastructure or systems, which could result in a business interruption. |
— Crisis and emergency management systems (at global and local level) |
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— Risk management policy and guidelines |
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— Global manufacturing footprint and global procurement |
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— IT security standards, measures and incident response team |
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— Disaster recovery plans in IT |
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Financial |
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Financial markets |
The unpredictability of financial markets may have a negative effect on Sulzer’s financial performance and its ability to raise or access capital. |
— Group financial policy |
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— Foreign exchange risk policy |
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— Trading loss limits for financial instruments |
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Credit |
Credit risks arising from financial institutions and from customers could have a negative effect on Sulzer’s financial performance and ability to operate. |
— For financial institutions, only parties with a strong credit quality are accepted (third-party rated) |
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— Individual risk assessment of customers with large order volumes |
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— Continuous monitoring of country risks |
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Liquidity |
Failure in liquidity risk management may have a negative effect on Sulzer’s financial performance and its ability to operate. |
— Continuous liquidity monitoring |
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— Management of liquidity reserves at group level |
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— Cash flow program to optimize liquidity and cash flow management |
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— Efficient use of available cash through cash pooling |