Annual Report 2012 - Inwido

FINANCIAL STATEMENTS
Operational Risks
RISK
Risk of losses on accounts receivable
The risk that the Group’s customers fail to meet their
payment obligations for accounts receivable constitutes
a customer credit risk.
Refund and product liability risks
Inwido could incur expenses in correcting faults in
delivered products and, in certain cases installation,
and could be found liable for damages to individuals
or property.
Risk of loss of key expertise
The loss of key individuals could negatively affect
the Group’s earning capacity.
Risk of operational interruptions
Inwido could be affected by operational interruptions
due to, for example, equipment failure, fire, strikes or
natural disasters.
Risk associated with product development
Inwido’s sustained earnings and competitive vigour is
to some extent dependent on its capacity to develop and
sell new innovative products and solutions demanded by
customers.
Business development risks
Risks associated with business development such as
corporate acquisitions and the Group’s long-term
strategic focus.
MANAGEMENT/EXPOSURE
Credit checks are performed on the Group’s customers
with information regarding their financial status being
obtained from various credit information agencies. In
certain cases, the risk of losses on accounts receivable is
mitigated by means of credit insurance. Bank guarantees
or other sureties are required of customers with low credit
ratings or insufficient credit history. The assessment of
credit risk is primarily managed by each subsidiary.
As per the balance sheet date, there were no significant
concentrations of credit exposures. See Note 2.
Inwido seeks to limit these risks by following locally
adapted procedures for quality assurance and through
extensive testing of the Group’s products. In 2012, compensation
costs incurred as a consequence of complaints
amounted to approximately 2 percent of net sales.
Inwido works actively to safeguard regeneration and identify
future leaders. Senior executives are regularly assessed to
identify needs vis-à-vis on-going in-service training and
competence development. In addition to applying a marketbased
salary structure, Inwido also uses various forms of
incentives for key individuals within the Group.
Together with its insurance advisors, Inwido conducts
regular risk inspections of its production units. The results
of these inspections are used to implement preventative
measures to reduce the risk of disruptions and accidents
in operations. Inwido is able to transfer production to other
units, mainly within each respective market, in the event
that a unit becomes inoperative.
Inwido also strives to maintain well-functioning cooperation
with local trade union organizations, thereby reducing
the risk of conflicts and strikes in which Inwido is directly
involved.
Through Inwido’s strong market presence, shifts,
trends and new requirements from customers and other
stakeholders are caught, providing a basis for the focused,
on-going development of the product portfolio.
Inwido establishes and develops procedures for the
analysis, implementation and review of acquisitions,
including due diligence. Risks associated with the Group’s
long-term planning are primarily addressed once a year
when the Board adopts the Group’s strategic plan.
Annual Report 2012 | Inwido AB 43