Operational risks

Operational risks can often be influenced, for which reason they are normally regulated by policies, guidelines and instructions.

Operational risks are part of Cloetta’s day-to-day work and are handled by the operating units. The operational risks include risks related to the brand, relocation of production, insurable risks and environmental, health and safety-related risks.

Read more about the statement of operational risks based on probability and impact in the document below.

Risks Probability Management Impact
Business ethics and brand risks Demand for Cloetta’s well known brands is driven by the consumers’ association of these with positive values. If Cloetta or any of the Group’s partners takes any measures in conflict with the values represented by the brand, the Cloetta brand could be damaged. Cloetta takes a proactive approach to its sustainability responsibility by implementing a Code of Conduct, ethical guidelines and routines.
Sustainability risks in the supply chain Cloetta uses several raw materials originating from countries with high risk regarding the working environment, social conditions and corruption. In addition, political instability can have a negative impact on costs. As far as possible, Cloetta strives to include supplier codes of conduct in all agreements. Cloetta has evaluated all raw material groups and prioritized them based on the existing sustainability chanllenges and Cloetta´s oppurtunities to address these challenges. Cloetta purchases Green Palm certificates for palm oil and UTZ-certified cocoa. Cloetta’s palm oil policy goes beyond that which is required in the RSPO standard and states that by the end of 2015, Cloetta’s suppliers must have a fully traceable pipeline back to known mills. By 2020 the same pipeline must be traceable down to known plantations.
Product safety risks Handling of food products places high demands on traceability, hygiene and safety. In a worst case scenario, inadequate control can lead to contamination or allergic reactions. Deficiencies in handling of food products can lead to lower confidence in Cloetta and the Group’s brands. Cloetta works with first-class raw materials and in accordance with international quality standards. Analyses through chemical and physical tests are performed on both raw materials and finished products. Issues of importance for product safety are gathered in special policies and there are plans for information or product recalls in the event of deficiencies.
Insurable risks Assets such as factories and production equipment can be seriously damaged, for example in the event of a fire or power outage. Product recalls can give rise to substantial costs, resulting from both direct costs and in the form of damage to Cloetta’s reputation. Cloetta has insurance programmes for property and liability risks, and works systematically to limit the risk for incidents.
Relocation of production lines To optimise efficiency, Cloetta continuously monitors capacity utilisation in production. Moving production from one factory to another is a complex process that can result in disruptions and delays in production, which can in turn lead to delivery problems. Cloetta has an experienced and efficient organisation with well established routines for handling relocation of production lines.
Access to the right expertise To a large extent, Cloetta’s future is dependent on its capacity to recruit, retain and develop competent senior executives and other key staff. Cloetta will continue to be an attractive employer. Employee development and follow-up plans, together with market-based and competitive compensation, contribute to Cloetta’s ability to recruit and retain employees.
Environmental risks Environmental risks arise mainly through water and energy consumption, wastewater emissions, raw material and packaging waste, production waste and transports. Cloetta sets environmental requirements for its production and regularly monitors the company’s impact on the environment, in addition to conducting systematic efforts to reduce its environmental impact.

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