Security and risk management

Protecting the Group's personnel, assets and reputation against a wide range of potential losses is an essential component in our operations. In all areas of risk management, the key element is having a good overview of any underlying risks. Risk workshops were arranged in business units and key Group functions in 2009, and development work with top management was continued in order to institute frequent risk reporting and follow-up procedures. As instability in the financial and economic environment increased during the year, the emphasis in this work was on the management of strategic and financial risks connected with the weaker market situation, the nickel price and customer credit.

Group risk management strategy was put into practice by issuing operational instructions in connection with personnel security, project security and fire safety as well as by carrying out regular audits and certain special programmes at individual sites. The Outokumpu Security Working Group (OSWG) continued its work on improvements at specific sites. A systematic crisis management programme was instituted during 2009, with crisis management teams being trained in handling challenging situations. Communication during crisis situations was a subject that received particular attention.

Fire safety and security levels in the Group were monitored through a total of more than 40 regular site audits executed using Outokumpu's own resources and, to a certain extent, jointly with the Group's insurance experts and insurance brokers. Fire audits and security audits were merged first time.

Activities initiated in 2008 in connection with risk management in the Outokumpu supply chain continued in 2009. One of the year's main goals was preparation for forthcoming changes in customs practices and the achievement of authorised economic operator (AEO) status, which will significantly ease the burden of customs processes and thus shorten lead times. Much effort was put into improving supply chain security as achievement of the authorised economic operator status (AEO). Work related to AEO status continues at certain Group sites in the EU.

Outokumpu's business is capital intensive and the degree of integration in key production processes is quite high. Other interdependencies also exist. To cover related risks, Outokumpu has a comprehensive and global property damage and business interruption (PD/BI) insurance programme. As the Group's most important form of insurance, PD/BI accounts for a substantial proportion of the insurance premiums paid by the Group. Other global insurance programmes which play a significant role include transport, credit and liability insurances. The renewal date for most Group-wide annual insurances is April 1.

More on risk management can be found here.