Operational & Societal risks

Competition

Competition presents the risk of a negative effect on sales and pricing of Nobia’s products and jeopardises the company’s market position.
Nobia operates in mature markets, which means that underlying demand in normal market circumstances is rel- atively stable. Notwithstanding this, Nobia is subject to considerable competition from other producers of simi- lar products.
Nobia’s products to the retail market are sold through own stores and franchises retailers. Sales to professional customers are conducted with regional and local con- struction companies via a specialised sales organisation or directly through the store network. If these players are not successful in selling Nobia’s products, it could have a nega- tive impact on Nobia’s earnings.

As regards to competitors, risk analyses are carried out both centrally and locally. Through its processes for moni- toring the business environment, Nobia follows up on new players in the market and their impact on the company. The company works to maintain strong and long-term customer relationships in strategic customer segments, and building relationships with new customers. Nobia has a structured and proactive method for follow- ing demand fluctuations. Robust measures and cost saving programmes for adjusting capacity have proven that Nobia can adjust its cost level when demand for the Group’s prod- ucts declines.

Information technology risks                     

The Group relies on IT systems in its day-to-day opera- tions. Disruptions or faults in critical systems have a direct impact on production. Errors in the handling of financial systems can affect the company’s reporting of results.
Cyber security risks are increasing in importance and
could have a major impact on Nobia’s operations. Theft or modification of intellectual property consti-
tutes a risk to our products and future business success.

Nobia has a global IT security policy, including quality assurance procedures that govern IT operations. The sys- tem landscape is based on well-proven products and the IT landscape is subject to continuous investments in order to remain up to date.
Cyber security is regularly discussed, addressed and invested by the IT Security function. Awareness of cyber security risks increases the readiness to quickly address any attacks.
Information security is monitored through IT security audits. Standardised processes are in place for the imple- mentation of new systems, changes to existing systems and daily operations.

Technical integrity of our Operating assets               

We have three major production facilities which account for approximately 75% of our total production capacity. If operations at any of these key facilities are interrupted for any significant length of time, it could have a mate- rial adverse effect on Nobia’s financial position or perfor- mance. Incidents such as fires, explosions, or large machinery breakdowns or the inability of our assets to perform the required function effectively and efficiently whilst pro- tecting people, business, the environment and stakehold- ers could result in property damage, loss of production, damage to reputation, and/or safety and environmental incidents.

 From this perspective, the aim of Nobia’s risk manage- ment is to effectively and cost efficiently protect its employ- ees, the environment, the company’s assets and the busi- ness. Nobia strives to create and retain a balance between loss-prevention activities and insurance coverage. The
loss-prevention work is conducted in accordance with established guidelines that include repeated inspections by external risk engineers.
Other important elements of loss-prevention activities are maintenance of production facilities and machinery, staff training, and ensuring good order. Nobia invests continu- ously in loss-prevention activities to reduce its risk of dam- age in various ways. For example, its facilities are normally protected by sprinkler systems. All plants are insured to replacement cost and for the loss of income. Nobia always works together with market-leading insurance companies.

Environmental impact and climate change  

Our main external environmental risks relate to phys- ical changes in climate and natural resources, changes in laws and regulations as well as changes in taxes and prices of various natural resources.
Furthermore, there are risks linked to a lack of con- trol of, for example, working conditions of subcontractors, serious environmental incidents or workplace accidents and unforeseen demand for environmentally certified products.
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Sustainability risks and climate-related risks are inte- grated into the Group’s overall process for assessing oper- ational risks. Risk assessment is part of our materiality pro- cess for identifying our most material sustainability topics. Risk prevention and management are integrated into stra- tegic planning as well as operational processes and rou- tines. Through our internal sustainability system, we iden- tify, manage and follow up on important sustainability topics, including risks. Sustainability management is inte- grated into central processes such as sustainability score- card in product development and assessment and evalua- tion of suppliers in the procurement process.
Through local environmental management systems, preventive measures are managed at each production plant, including emergency preparedness.
During the year, we also initiated the process of quantifying the financial impact of climate-related risks, in accordance with recommendations from the Task Force on Climate-Related Financial Disclosures (TCFD).

Attraction and retention of key skills and talent

Our success is driven by our people. Key to our long- term success is attracting, retaining, recruiting and devel- oping a skilled and committed workforce.
Access to the right skills, particularly management and technical skills, is critical to support the performance and growth of our business.
Losing skills or failing to attract new talent to our busi- ness has the potential to undermine our ability to drive performance and deliver on our strategic objectives.
Accidents or incidents at the workplace due to lack of proper safety measures can negatively affect productivity and Nobia’s employer brand.

To attract skills and talent we are investing in employer branding; we are engaged in fair and transparent recruit- ment practices, and regular reviews of our diversity and inclusion, labour and human rights policies. We ensure that we have competitive remuneration for the position and country of operation in question. We support and invest in both Group-wide and local training programmes. We have implemented measures to monitor and manage suc- cession planning, staff turnover, internal placements and training.
We perform 360˚ feedback at a management level and regularly conduct performance and development reviews at a local level. We carry out a Group-wide employee sur- vey approximately every two years.
Through our Speakup communication tool, employees can raise concerns about conduct that may be contrary to our values.
The Group regularly assesses and manages safety and health risks in operations. The safety of our employ- ees is our highest priority. All units conduct systematic health and safety work in which every workplace acci-
dent is analysed, and measures are taken to prevent a sim- ilar accident from happening again. Safety is always high- est on the agenda through daily monitoring of incidents and accidents. Both managers and employees are continu- ally trained in health and safety. Moreover, seven of our 14 production facilities have OHSAS 18001 certification. In our Nordic operations, routines and processes have been implemented for both monitoring and escalating work- place accidents.

Cost and availability of raw material

Access to sustainable sources of raw materials is essen- tial to our operations. The raw materials used by the Group include significant amounts of wood, steel, alumin- ium and plastics. Wood prices and availability may be adversely affected by reduced quantities of available wood supply that meet our standards for credibly certified or controlled wood, the impact of climate change through increased frequency of severe weather events, changes in rainfall or increased instances of pest and disease outbreaks and increasing use of wood as a biofuel. Cost variations for components (such as handles, work- tops and hinges) and goods for resale (such as appliances) are mainly caused by changes in the commodity prices of raw materials in the global market or suppliers’ ability to deliver.

Risk of delivery disruptions Nobia purchases raw mate- rials and components from Europe, including Northern Italy and Asia/Australia. Disruptions to subsuppliers’ abil- ity to deliver goods to Nobia, as a result of both global and local distributions, could lead to delays to Nobia’s deliver- ies to its customers. Delivery delays could arise for a vari- ety of reasons, for example, extreme weather conditions, pandemics or political disruptions. Such delays could result in costs, loss of income and a tarnished reputation. 

We are committed to acquiring our raw materials from sustainable and responsible sources. We work continually with our suppliers to increase the share of recycled mate- rials and we encourage legislation supporting the local col- lection of recycled materials.
We have multiple suppliers for each of our operations and our centralised procurement teams work closely with our operations in actively pursuing longer term agree- ments with strategic suppliers. We source our wood from diverse regions to mitigate the potential impacts of climate change on our wood suppliers.
Efficiency improvements in the company’s operations, changed product specifications and price increases are examples of measures to reduce the effect of rising costs for input goods