Risk management

The objective of Vaisala’s risk management is to identify and manage material risks related to strategy implementation and business operations. Vaisala’s Risk Management Policy, approved by the Board of Directors, covers the company’s strategic, operational, hazard, and financial risks. The policy aims to ensure the safety of the company’s employees, operations, and products as well as the continuity and compliance of business operations.

The Board of Directors defines and approves risk management principles and assesses the effectiveness of risk management. The Audit Committee reviews compliance with Risk Management Policy and processes.

Risk management is integrated into key business processes and operations by incorporating risk identification, assessment, management, and risk reporting actions into the core processes. The most significant risks are reported to the Vaisala Leadership Team quarterly and to the Audit Committee annually.

Risks related to sustainable practices

Environment

We assess environmental risks regularly as part of our environmental management system. The most significant environmental risks of our operations are related to potential emergency situations that can lead to local contamination. These risks are controlled as part of our emergency preparedness and our management process for hazardous substances. Climate change has been assessed to increase the likelihood of certain risks (H4 and O1 in the table introduced here). On the other hand, climate change may provide Vaisala also with business opportunities.

Social and employee matters

On an individual level, employee risks relate to occupational health and occupational accidents. On corporate level, the risks are related to the company’s ability to retain and attract talent. These risks are controlled through continuous development of Vaisala’s occupational health and safety system, support for the well-being of our employees, monitoring employee satisfaction, as well as providing purposeful work, learning opportunities, and an equal work environment

Respecting human rights and preventing corruption and bribery

Risks related to human rights violations, corruption, and bribery impact corporate reputation, brand, and the company’s ability to attract the best talent. Other potential consequences are judicial processes, penalties, contract cancellations, and exclusion from tenders. These risks are managed through recurring and compulsory Code of Conduct trainings as well as audits. We choose our suppliers carefully and verify the sustainability of their practices. Our Supplier Code of Conduct sets the requirement level for their operation. Our other partners, such as distributors and agents, are committed to complying with our Code of Conduct. The compliance of all our partners is assessed and monitored.

Annual Report 2023

Near-term risks and uncertainties

Changes in geopolitical situation, interest rates and inflationary environment may affect industrial investments and economic situation and increase risk of achieving Vaisala’s financial targets.

Industrial actions in Finland may cause disruptions in Vaisala’s operations and deteriorate Vaisala’s delivery capability. Vaisala’s delivery capability may deteriorate due to disruptions in suppliers’ operations, Vaisala’s production or project delivery operation, or disruptions in incoming and/or outgoing logistics. Temporary component shortage may cause delays or interruptions in deliveries or generate additional material costs. Cyber risk and long disruptions in IT systems may impact operations and delivery capability.

New and changing regulations impacting product acceptance, operation’s capability to meet changing compliance requirements, and changes in international trade policies may cause delays or interruptions in supply chain. Customers’ preference for local manufacturing may reduce demand for Vaisala’s products and services. Customers’ budgetary constraints, complex decision-making processes, and missing financing solutions may postpone closing of infrastructure contracts in Weather and Environment business area.

Interim Report January-September 2024, October 2, 2024

Risk map

Various risks may have an adverse effect on Vaisala’s business operations. The list below explains some of the risks with their potential impacts and how Vaisala manages those risks. Risk likelihoods and impacts are estimates, provided by a small group of subject area experts. No quantitative methods have been applied to assess either likelihoods or impacts.

Annual Report 2023

Vaisala as an investment

Vaisala is a global leader in measurement instruments and intelligence for climate action. We equip our customers with devices and data to improve resource efficiency, drive energy transition, and care for the safety and well-being of people and societies worldwide.