Annual Report 2012 - Inwido

FINANCIAL STATEMENTS
Operational Risks (continued)
RISK
Corporate governance and policy risks
In the event of inadequate internal control, the
Group risks being exposed to a crisis of confidence.
Insurance risks
These risks involve the expenses that Inwido could incur
due to inadequate insurance cover for products, property,
disruptions, liability, transport, life and pensions.
Customer dependency risk
Inwido operates in a market that is exposed to
competition and existing customers may choose to
use competing suppliers.
MANAGEMENT/EXPOSURE
Inwido develops internal control procedures on an
on-going basis. Examples include the division of duties
between the Board and the CEO and reporting instructions.
The Group strives to maintain insurance cover that keeps
risk at an acceptable level for a Group of Inwido’s size and
that is, at the same time, cost-efficient. At the same time,
continuous efforts are made to minimize risks in operations
through proactive measures. Insurance cover is also maintained
for Inwido’s senior executives and Board members.
Inwido takes the view that its insurance protection is
appropriate for the risks normally associated with its
operations. There is naturally no guarantee that Inwido
will not incur losses beyond the scope of its insurance cover.
Inwido has a broad customer structure divided between
the consumer and industry markets, as well as a presence
in a number of different geographical markets.
External risks
RISK
Market risk
Demand for Inwido’s products is primarily affected by activity
in the market for residential building. The new building
market is more cyclical than the renovation market. In a
general economic downturn with lower building activity,
demand for Inwido’s products and services could decrease.
Political decisions can also influence customer demand independently
of economic trends (see Political decisions below).
Competition
Inwido operates in markets that primarily comprise a
large number of local competitors but that also include
companies that operate internationally.
Prices for raw materials
Inwido relies on on-going deliveries of wood, glass,
aluminium, fittings, etc. Inadequate supply could entail
increased costs and, in certain cases, disrupted production.
Normally, there is a certain displacement between purchase
and sales price adjustments due to agreements entered with
suppliers and customers. Altered price levels affect Inwido’s
purchasing prices with a delay of up to six months.
MANAGEMENT/EXPOSURE
Inwido maintains a presence in a large number of countries
and in different market segments, thereby balancing, to
a certain extent, various country-specific risks. Inwido’s
operations are also affected favourably by the debate on
climate change and increasing demands for energy-efficient
housing, which are not particularly affected by economic
trends.
Today, Inwido is Northern Europe’s largest supplier of
environmentally friendly window and door solutions with
a strong market position in most of its current markets.
Inwido’s size allows it to derive economies of scale and
benefit from best practices in areas including purchasing,
product development, production and processes. Inwido
constantly strives to meet customer needs with new,
innovative, energy-efficient and attractively designed
products. This is one of the most important prerequisites
for the Group’s future competitiveness.
Inwido has built up its relations with key suppliers over many
years. Inwido’s central purchasing organization coordinates
purchases of the major material categories. By centralising
its purchasing, Inwido is able to enhance its negotiating position
and cut costs for materials. To safeguard supply and to
increase its control of the value chain, the Inwido Group also
includes a number of companies that produce sealed window
panes and fittings and refine aluminium profiles.
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Inwido AB | Annual Report 2012