Risk Management

The objective of risk management at Incap is to continuously acquire information, assess, and manage the opportunities, threats, and risks present in the company’s operations to ensure that the company achieves its goals and secures the continuity of its operations. The purpose of risk management is, among other things, to support the implementation of the strategy, the achievement of financial objectives, the fulfilment of customer commitments, dividend payment capacity, shareholder value, responsible business practices, and business continuity.

This objective is achieved when the group has:

Knowledge of the uncertainties, risks, and opportunities related to its objectives and operations.
Consistent methods to identify, assess, and manage risks and their consequences.

At Incap, risk management is a systematic activity aimed at ensuring the proper identification, assessment, management, and monitoring of risks. It is an integral part of Incap’s planning and management process, decision-making, daily operations, and control and reporting procedures. Risks are assessed and managed comprehensively from a business perspective. This means that key risks are identified, assessed, managed, monitored, and reported as part of the management system’s reporting and business operations.

The President and CEO of Incap is responsible for arranging risk management within the Group according to Risk Management Policy monitored by the Audit Committee and approved by the Board of Directors. The Board also reviews risks and risk treatment action plans.

Each member of Incap’s Management Team is accountable for handling risks within their respective domains. Incap’s Chief Financial Officer is in charge of the yearly risk management process, financial risk oversight, and risk governance, while leading company’s financial and sustainability reporting, internal controls and financial risk management.

The objective of internal control at Incap is to ensure that

Operations are effective, functional and in line with the strategy.
Financial and sustainability reporting and information given to the management are reliable, complete and up to date.
Financial and sustainability reports issued by the company give substantial and correct information on the company’s financial position and sustainability practices.
The company operates according to specified internal operating instructions.
The Group follows laws and regulations.

Internal control

The Audit Committee is responsible for monitoring the efficiency of internal control, internal audit and risk management, as well as for reviewing the processes regarding risk management, governance and internal control. Internal control at Incap is implemented at all levels of the company by the Board of Directors, the management and Incap’s personnel.

The control environment of the Group is based on the corporate principles and values.

Incap’s operative units observe Group-level instructions, such as the guidelines for accounting and reporting, sustainability reporting instructions, as well as principles for risk management and internal control relating to financial and sustainability reporting. The President and CEO and the directors of different functions are responsible for arranging adequate control actions, as well as training related to the observance of instructions in their units. Moreover, they are responsible for ensuring that accounting and administration in their own areas of responsibility comply with the laws, the Group’s operating principles and the instructions and orders given by the Board of Directors of Incap Corporation.

The related control actions are operational instructions and practices, which ensure the implementation of the management’s orders. These actions include, for instance, approvals, authorisations, inspections, balancing, performance monitoring, protection of property and division of tasks.

Own operations in the company are monitored continuously also by means of separate evaluations, such as internal audits and audits of the accounts, supplier audits made by customers, as well as external and internal quality audits.

Control of financial and sustainability reporting is performed by the Board of Directors, Audit Committee, the auditors, the President and CEO, the Group’s Management Team and the Group’s finance departments. The monitoring is done continuously, as a part of daily duties or on specific assignment.

The Group aims at integrating control in all daily operations. Efficient internal control requires that the duties are divided in an appropriate manner and that eventual risky combinations of duties are eliminated. Tools for control are among others the Group-level instructions, checkpoints of financial and sustainability reporting, instructions for accounting and reporting as well as the Group’s regular business reviews.

The Group has no specific organisation for internal auditing due to the scope of its business. Internal audit is organised in such a way that the necessary audit services are procured from an external auditing service provider from time to time, proposed by the Audit Committee and approved by the Board of Directors. The service provider, usually an authorised public accountant, shall be independent, competent, and fitted with adequate resources.

Financial and sustainability reporting process and controls

Correct financial reporting at Incap means that the company’s financial statements provide a true and fair view of the Group’s operational performance and financial position. Correct sustainability reporting means that the sustainability reporting provides a true and fair perspective on sustainability matters. Internal control relating to the financial and sustainability reporting process is part of the Group’s internal control system.

Common accounting principles for the Group have been determined based on the applicable laws, ordinances and standards, reviewed by the Audit Committee and approved by the Board of Directors. The Group’s finance department gives instructions to the organisation on the reporting principles of monthly financial and quarterly sustainability reporting as well as for budgeting and estimates. The Group’s finance department is accountable for reporting processes and practices connected with the financial and sustainability reporting as well as training for the organisation when necessary.

The Group’s finance department prepares the consolidated financial and sustainability statements and is responsible for the interpretation and application of financial statement and sustainability standards.

The local finance departments of the subsidiaries are responsible for both external and internal accounting and reporting of the subsidiaries. The subsidiaries report to the Group’s shared financial reporting system monthly. Sustainability reporting is carried out in a dedicated separate Group level reporting system on a quarterly basis. Reported figures are reviewed by the finance departments of both the Group and its subsidiaries, as well as by relevant expert departments — such as Human Resources, Health, Safety and Environment, and Quality — where applicable, or when the figures relate to sustainability data. Part of the Group bookkeeping and financial reporting tasks have been outsourced to an external partner.

The Group’s finance department prepares reports on actual and estimated financial performance to be included in the meeting materials for the Audit Committee and for the Board of Directors. The finance department supervise compliance with the reporting and control processes. All finance functions monitor the validity of external and internal financial and sustainability reporting data, for example by analysing the differences between actual performance to previous year, budget, and forecasts. The key figures are analysed using the same approach.

Roles and responsibilities

The Board of Directors ensure the appropriate arrangement of the control of the company accounts and finances. The Audit Committee is responsible for monitoring the quality and integrity of, and reviewing, the interim reports, financial statements, sustainability reporting and reporting processes, as well as monitoring the efficiency of internal control, risk oversight and risk management. The Board of Directors reviews and approves the financial statements, interim reports and sustainability reports.

President and CEO, and the directors of subsidiaries, are responsible for implementation of internal control relating to financial statement reports and sustainability reporting. In this task, they are supported by the Group’s finance and administration.

The Group’s President and CEO is responsible for maintaining an efficient control environment. The President and CEO is responsible for the legality of accounting practices and for ensuring that the company’s finances are managed reliably and with competence. The subsidiary Managing Directors arrange internal control and risk management in practice. The Group’s management and personnel promote efficient internal control of the financial and sustainability reporting processes with their own actions.