Top Navigation SKF Group English Main navigation THIS IS SKF FINANCIAL INFORMATION THE SHARE GOVERNANCE CONTACTS Risk management The SKF Group operates in many different industries and geographical areas. A general economic downturn on a global level, for exampel caused by a pandemic, or in one of the world’s leading economies, could reduce the demand for the Group’s products, solutions and services. Terrorism and other hostilities, natural disasters and disturbances in worldwide financial markets, could also have a negative effect on the demand for the Group’s products and services. There are also regulatory requirements, taxes, tariffs and other trade barriers, price or exchange controls or other governmental policies that could limit the SKF Group’s operations. SKF applies an integrated approach to risk management and has implemented an enterprise risk management (ERM) process that covers all parts of the Group. During 2020, the evaluation of the risk impact has been changed from a strictly financial evaluation to include impact on strategy, long term financial performance, as well as brand and reputation. The enterprise risk and opportunity management process is illustrated below. The risks highlighted below are the main risks identified during the 2020 Group ERM process. The main areas of opportunity are described on pages 20–21 in the SKF Annual Report 2020. Sustainability is integrated in SKF’s business and in the risk management framework. Operational environmental, health, safety and human rights risks are managed via SKF’s groupwide management procedures covering all signiﬁcant sites. The system for environment, health and safety (EHS) is certiﬁed in accordance with ISO 14001 (environment) and OHSAS 18001 (health & safety). The latter will soon be replaced with ISO 45001. SKF’s ISO 5001 certification (energy management) covers factories making up 90% of SKF’s energy use. SKF’s Code of Conduct reflects relevant aspects from the SA8000 standard and the UN Guiding Principles on Business and Human Rights. SKF has established a product material compliance approach to help SKF’s business to comply with directives and legislation such as REACH, RoHS, WEEE and DoddFrank regarding conflict minerals. For information about financial risks including currency risks, interest risks, liquidity risks and credit risks, see Note 26 on pages 94–97 in the SKF Annual Report 2020. For Information about ongoing compliance related investigations, see Note 19 on pages 86–87 in the SKF Annual Report 2020. RISK Information Security Increasing cyber security threats. Increasing requirements from customers and governments to adhere to information security standards such as ISO, NIST and ITAR. MITIGATION Continuously measure and evaluate effectiveness of protection mechanisms and invest in new solutions to meet the changes in threat landscape. Strengthen the information security awareness and continue to implement Controls according to SKF’s Information Security Management System (ISMS). RISK Digitalization Increasing demands for a fully connected value chain and excellent digital customer experience placing high demands on the speed of the digital transformation. MITIGATION Strategic initiatives in place to ramp-up digitalization including strengthening capabilities, investing in digital talents, modernizing, harmonizing and simplifying the IT landscape. RISK New product technologies Introduction of disruptive and quickly changing new technologies. MITIGATION Acquisitions and partnerships to help SKF make step changes in new technology areas. Establish a process to systematically look for new opportunities. RISK Aftermarket disruption New online channels disrupting existing channels to the aftermarket. MITIGATION Maintain existing channels to market, and at the same time work strategically with new digital channels. Give the SKF channel partners a competitive advantage through online tools. Ensure leadership across full SKF value chain and focus on application specific offers which bring differentiation/uniqueness making it harder for digital channels to take market shares from SKF. RISK Workforce Changing demographic in combination with “the war of talent” and the need of a digital competence shift leading to difficulties to attract and retain talented employees with the right skills. MITIGATION Future Workforce is defined as a SKF strategic focus area. Takes a holistic approach in strengthening SKF as the employer of choice. Employee engagement, leadership, competence and way of working are all key building blocks of the strategic focus area. RISK Business interruption Demand chain interruption. MITIGATION Implement a sourcing strategy with reduced single sourcing and regionalized supplier base. Implement a systematic process to manage supply chain disruption situations. Modernize, harmonize and simplify the IT landscape to reduce risk of system failure. RISK Global/regional crisis Sanctions, tariffs and other trade barriers. Climate change, pandemics, war and other major events. MITIGATION Regionalize SKFs manufacturing footprint and Supplier base. Prepare for a situation where US technology cannot be used in China. Focus on business that will benefit on the increased climate focus. RISK Compliance The compliance risks include illegal cooperation and information exchange between competitors and antitrust risks in the distribution business. MITIGATION Policies & instructions combined with management commitment and a strong tone from the top. Employee training, audits and the SKF Ethics & Compliance Reporting Line. This is valid for all compliance areas. ORGANISATION About SKF Sustainability Brand protection Supplier portal CAREER Find a job Graduates Students Professions Why work at SKF? 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