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 |
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Risk exposure |
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Main loss controls |
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External and markets |
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Market assessment |
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Market developments that are assessed inappropriately could lead to missed business opportunities or losses. |
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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 |
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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. |
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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 |
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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. |
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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 |
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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. |
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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 |
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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. |
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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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Immediate implementation of COVID-19 preventive measures in all legal entities and workplaces, including: informing and training employees on COVID-19 preventive measures; implementation of risk assessment procedures, travel ban for high-risk countries and approval concepts for business travel; implementation of remote working; implementation of remote video to support final acceptance procedures in manufacturing |
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Environmental |
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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. |
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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 |
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Non-compliant or unethical behavior could lead to reputational damage, fines and liability claims. |
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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 |
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Failure of high-quality products and services could lead to repeated work, reputational damage or liability claims. |
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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 |
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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. Business interruption caused by pandemic-related lockdowns could have an impact on operations and supply chain and thus could lead to serious economic impact. |
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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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Implementation of COVID-19 business interruption response team to support businesses in becoming qualified as essential service providers |
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Global monitoring of COVID-19-related governmental decisions |
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Enhancement of IT infrastructure to cope with higher data volumes during extended remote work |
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Financial |
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Financial markets |
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The unpredictability of financial markets may have a negative effect on Sulzer’s financial performance and its ability to raise or access capital. |
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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 |
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Credit risks arising from financial institutions and from customers could have a negative effect on Sulzer’s financial performance and ability to operate. |
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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 |
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Failure in liquidity risk management may have a negative effect on Sulzer’s financial performance and its ability to operate. |
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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 |