Business risk

Being a long-term owner, the exposure to companies and sectors varies over time depending on the global economic development. Currently the geopolitical situation, wars and supply chain challenges affect all businesses. Market conditions and industry dynamics change. Transactions may not be feasible at a preferred 
time. 

Risk Mitigating Actions: The Board has set investment principles and adopted an investment policy. The overall portfolio risk is mitigated by investments in several different industries and geographies. The business teams and the Executive Leadership Team follow up continuously and report regularly to the Board on the development of the portfolio.

Technology shift risk

The pace of technology change and the digital transformation is rapid. Being at the forefront of R&D and adapting to new technology is a prerequisite for all portfolio companies to become or remain best-in-class.

Risk Mitigating Actions: Investor’s business teams constantly analyze the industries and the technology 
development and adapt the value creation plans. The risk is managed by continuous focus on agile and flexible business models, product development, customer needs, market analysis and cost efficiency. The 
value creation plans are reported to the Board. Investor’s Executive Leadership Team and Board regularly discuss and follow up on the value creation plans.

Environmental and climate-related risk

Risks related to environmental factors of our portfolio companies continue to grow in importance at the same time as regulatory activity and reporting requirements are increasing. This includes for example resource scarcity, climate change and biodiversity. Environmentally related risks have bearing on most traditional risk types, such as reputational and market risk for our portfolio companies.

Risk Mitigating Actions: The Sustainability policy is updated annually and adopted by the Board. Clear expectations are set on the portfolio companies. Measures and targets have been set to further future-proof Investor and the portfolio companies. Investor expects the portfolio companies to continue to mitigate negative environmental impact and transition to a low carbon economy, e.g. by developing and executing on climate strategies and committing to reduce emissions in line with the Paris Agreement. This work is driven through the board representatives in the individual companies including following up on companies’ targets and measures to reduce their environmental impact. Investor also monitors and follows up on the portfolio 
companies’ progress through dialog and reporting. 

Political and geopolitical risk

Political and geopolitical uncertainty has implications on the portfolio companies’ businesses and strategies. Increased protectionism and international trade restrictions may lead to deglobalization and impact the business environment in which the portfolio companies operate.

Risk Mitigating Actions: The Board and Executive Leadership Team monitor and work proactively to assess 
political and geopolitical risks and how they affect the portfolio companies’ businesses. When possible, Investor representatives participate in various relevant forums to promote transparency, a level playing field 
and free trade.