Risks and risk management

Risk management

Risk management is a part of Olvi Group’s everyday management and operations. Our objective is to ensure the realization of the strategy, as well as secure financial development and the continuity of business. The group has a risk management policy and guidelines defining the policy in more detail. These are used Group-wide to determine the purpose, contents, governance model, and roles of risk management and provide guidelines for the practical process by an annual schedule.

The objective of risk management is to develop the organization’s risk awareness and a proactive way of managing risks, increase opportunities and decrease threats to the achievement of business advantages, ensure a sufficient risk management operating model throughout the organization, and manage risks as an integrated part of business operations, planning, and decision-making.

Geopolitical situation

The geopolitical situation has affected Olvi’s operating environment. The war in Ukraine has significantly increased business risks. The coronavirus pandemic caused problems in the availability of raw materials and packaging materials, and the war in Ukraine has further complicated the procurement of materials.

The increase in the costs of packaging materials, which started during the pandemic and continued in 2023, leveled out as a whole in early 2024 compared with the previous year. However, the costs of some production batches continued to increase at the beginning of 2024. In addition, the prices of raw materials, especially barley malt, sugar, and carbon dioxide, continue to be at a historically high level.

Uncertainty in prices and availability has continued in the market because of the war and weather events caused by climate change. The considerable fluctuations in energy prices continue. Logistics costs remain at a high level because of rising fuel prices. Olvi is responding to the cost increase by improving operational productivity and assessing the adequacy of sales prices to maintain profitability.

Sustainability risk management

Our operations involve several risks related to sustainability. The identification and assessment of and preparation for these risks have become a significant part of risk management. We have identified these as part of strategic, business, financial, and compliance risks. Sustainability risks are identified in connection with several different risk assessments, such as human rights and climate change assessments.

Read more from our annual report.

The operating environment in Belarus

The business operations and financial forecasting in Belarus continue to involve considerable uncertainty. For example, the uncertainty concerns the development of exchange rates, the unpredictability of the operating environment, local legislation and taxation, trade sanctions, and the functioning of financial transactions with Western countries. Olvi’s Belarusian subsidiary operates using its cash flow financing. Cash and cash equivalents stood at EUR 8.8 million at the end of the review period. Despite the amendments made to the legislation preventing the sale of foreign-owned companies in Belarus in 2024, the prohibition of selling shares in Olvi’s subsidiary remains in force, and Olvi does not have permission to sell shares.

Cybersecurity

Cybersecurity threats have increased because of the escalation of the global geopolitical situation, among other reasons. Olvi Group has prepared for the increasing information security threats in many ways. Personnel are provided with training, information about threats is provided regularly, and cybersecurity guidelines are reviewed during induction training. Olvi’s information systems are protected through regular updates, backups, firewalls, anti-malware software, content filters, and threat detection programs.

Consumer behaviour

Despite the recent easing of the overall cost level, high consumer prices continue to weaken consumers’ purchasing power and affect consumer behavior. This change can already be seen as a shift in consumption towards cheaper product options. In addition, overall consumption can decrease, and the premiumization trend may stop. There are differences between markets. Olvi Group is responding to the change by developing its product portfolio in line with consumer demand and by maintaining and strengthening market shares.