Internal control and risk management make sure that the Neo Industrial's operations are as effective and profitable as possible, and that the information that it provides is trustworthy and that regulations and operating principles are followed.
The Board of Directors has the highest responsibility of monitoring accounting and capital management in the company. The Managing Director is responsible for organizing the controlling system and risk management in practice. The company's financial situation and development is monitored on a monthly basis, and the information is published in annual and interim reports. A more detailed description of the company's internal control and risk management is included in the company's separate Corporate Governance Statement.
The company's Board of Directors has established an Audit Committee for the Group's internal control and audit. The committee reports to the Board. An operative internal audit is mainly carried out by the company's own organization, and third party experts are used on a project basis.
Risks and risk management
Neo Industrial's financial risks include currency, interest rate, commodity, liquidity, credit and investment market risks. Financial risks and protection measures are described in more detail in notes to the financial statements. The company's future risk factors are related to the business development of its portfolio companies.
In the Cable segment, the most significant risks are related to market development, fluctuations of raw material prices and currencies as well as working capital management in various situations. During considerable seasonal fluctuations, suppliers' terms of payment affect on the ability to ensure competitive times through sufficient inventories. Through developing of the production processes the impact of the fluctuations in the factories' workload is being mitigated.
In 2018, Neo Industrial's Audit Committee reviewed business risks, balance sheet values, financing, liquidity, test calculation procedures, IFRS 15, IFRS 9, IFRS 16 regulation's effects. Internal audit activities were directed to ensure continuity and to manage process and ICT risks.