| Risk |
Risk description |
Risk management |
| Markets and renewal |
- The general economic development, functioning of the financial markets and the political environment of L&T’s operating countries have an impact on the Group’s business operations.
- Geopolitical conflicts may cause uncertainty, which can have an effect on the general level of economic activity and industrial production capacity.
- Changes in markets and the market environment, such as municipalisation and market changes pertaining to recycled raw materials may have an unfavourable effect on the Group’s business operations and business growth.
- The development of the market prices of emission rights, secondary raw materials, electricity and oil products may increase production costs.
- New COVID-19 variants may lead to new orders or recommendations by the authorities, resulting in customer-specific production restrictions and adjustment measures.
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- Creating and regularly updating scenarios, regular assessment, sharpening and updating of the strategy, taking industry changes into account and recognising the need for renewal as part of the continuous strategy process.
- Active monitoring of the market situation and legislative developments, and dialogue with the public authorities and legislators.
- L&T is independent of large individual customers and has a diverse service offering.
- Development of new service product.
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| Climate change |
- Extreme weather phenomena, such as substantial increases in annual rainfall and snowfall, may lead to higher costs due to complications in service production.
- More information is provided in the TCFD report on page 18.
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- A proactive approach and careful planning of production and operations.
- Development of new service products and processes.
- More details on the risks associated with climate change are provided in the TCFD report on page 18.
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| Human rights |
- Risks related to human rights, such as deficiencies in working conditions, harassment, racism, discrimination
- and other unethical conduct.
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- Careful compliance with legislation and collective agreements.
- L&T mainly operates in Finland and Sweden with local partners, and the risk of human rights violations is low in these countries.
- Exercising particular care with regard to employment relationships with employees who are in a vulnerable position.
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| ICT systems, data security and data protection |
- Disruptions, delays and functional challenges related to information and communications systems and their deployment may affect L&T’s operations and customer service.
- The renewal of business-critical systems may cause disruptions in service production.
- Cyber crime may pose risks to L&T’s data security and business continuity.
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- Developing the systems environment and ensuring the reliability of the ICT environment by, for example, identifying which systems are critical to operations and defining the allocation of responsibilities between the system vendors and L&T.
- Comprehensive planning of the deployment of new systems and related operating models.
- Data security guidelines and employee training.
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| Acquisitions |
- The success of acquisitions may affect the achievement of the Group’s growth and profitability targets. Failures
- in acquisitions may impact the Group’s competitiveness and profitability and change the Group’s risk profile.
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- Acquisition agreements, the strategic and financial analysis of potential acquirees’ business operations, comprehensive due diligence.
- Effectively executed business integration programmes.
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| Reputation |
- Topics discussed in mass media or social media concerning the industry or L&T’s operations may reduce trust in the company and have a negative impact on its reputation.
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- Continuous development of the company’s governance model, proactive risk management and monitoring practices.
- Quick, reliable and open communication with stakeholders.
- Crisis communication principles.
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| Personnel |
- Challenges related to the availability of labour and employee turnover may complicate service production.
- The potential reduction of employee satisfaction may affect L&T’s competitive advantage, which is largely based on the work of skilled and motivated personnel.
- COVID-19 and other highly contagious respiratory infections increase the number of sickness-related absences, which causes disruptions in L&T’s service production.
- A permanent increase in sickness rates and the personnel’s disability and accident pension costs may affect L&T’s competitiveness and profitability
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- Improving the employee experience by developing induction training and supervisory work as well as by promoting job rotation and career advancement opportunities for employees.
- Co-operation with municipal employment services, central government organisations and various educational institutions to ensure the availability of labour.
- Promoting work-based immigration and the employment of special groups.
- Regularly conducted job-specific and site-specific risk assessments and workplace surveys, and supporting the employees’ work ability and capacity to cope with the demands of work through activities that promote work ability.
- L&T’s own sickness fund, which supports L&T’s work ability management and complements occupational health care.
- The Suitable Work model, which supports the rehabilitation and employment of people at risk of disability pension.
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| Damage-related risks |
- A fire at a recycling plant may result in a momentary or extended interruption of the plant’s operations. The significance of the risk of fire is reduced by the fact that individual plants or production lines have no substantial impact on L&T’s overall profitability.
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- Business continuity planning, developing first-hand fire extinguishing preparedness and training employees on how to respond to a fire or other hazardous situations.
- Continuous insurance cover that extends to all of the Group’s operating countries and subsidiaries and that includes policies for injuries, property damage, business interruption, third-party liability, environmental damage and transport damage, for example
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| Risk of environmental damage |
- L&T’s business includes the collection and transport of hazardous waste as well as processing at the Group’s own plants. Incorrect handling of hazardous waste or damage to equipment may result in harmful substances being released into the environment. L&T may become liable for damages due to this.
- The most significant environmental risks involved in L&T’s operations are related to waste storage and processing as well as chemical safety.
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- Systematic environmental surveys of plants, preventive maintenance plans for equipment, audits and the long-term training of personnel.
- Insurance
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| Financial risks |
- Potential interest rate hikes may increase the company’s interest costs.
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- More detailed information on the management of financing risks is provided in the notes to the consolidated statements, on page 49.
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