Risks

Risk management

The Board of Directors of Oriola approves the company’s risk management policy in which the risk management operating model, principles, responsibilities and reporting are specified. The Board assesses the Company’s long-term strategic risks and oversees the effectiveness of the risk management. The Board appointed Audit Committee regularly reviews and monitors the implementation of the risk management policy in the Group and the risk management process. 

Oriola has specified the company’s risk management model, principles, organisation and process in the Group Risk Management Policy. The Group Risk Management Policy defines the enterprise risk management system, objectives, roles and responsibilities within Oriola in order to identify and manage risks related to execution of the Company’s strategy and operations. The Group Risk Management Policy is the main risk management document within Oriola and must be followed by all Oriola business units, subsidiaries and entities. Additionally, the Group has a Code of Conduct policy, a Treasury policy and an Approval policy covering compliance and financial risks. Oriola’s risks are classified as strategic, operational, financial and hazard risks. Risk assessment and management are key elements in the strategic planning, operations and daily decision making in the company. 

The Group’s risk management seeks to identify, measure and manage risks that may have an adverse or beneficial impact on Oriola’s operations and achievement of the set goals. The internal control and risk management systems related to Oriola’s financial reporting are aimed at ensuring the reliability of the company’s financial statements and financial reporting, as well as the company’s compliance with legislation and generally approved operating principles.

Strategic and financial risks

Oriola operates in regulated pharmaceutical distribution and retail markets monitored by authorities in both operating countries. The main megatrends impacting Oriola’s business environment are ageing of the population, increased spending on health and wellbeing, growth in speciality pharmaceuticals, the digitalisation of the retail trade and services, sustainability as well as eventual pandemics.

Oriola has identified the following principal strategic and operational risks that may have an adverse impact on the results: Changes in the pharmaceutical market regulation and related licences, pricing, parallel import and public reimbursement, as well as increased competition through the growing number of companies and pharmacies in e-commerce, the decreasing share of single channel distribution in public healthcare, and the loss of several key pharmaceutical company agreements. In addition, the changes in the resources of public healthcare as well as restrictions set by the authorities on companies’ businesses and citizens’ mobility caused by the pandemic may have an adverse impact on Oriola’s result. 

The main financial risks for Oriola involve currency rate, liquidity, interest rate and credit risks. Changes in the value of the Swedish krona have an impact on Oriola’s net sales, earnings and consolidated statement of financial position. Changes in cash flow forecasts may cause impairment of goodwill. More information about financial risk management can be found in note 8.3. in the notes to the Consolidated Financial Statements.