Risk assessments are performed at all levels of the organization. Material risks for our Business Units and our Business Partner functions are reported to the Executive Committee and the Audit & Risk Committee twice a year.
In addition, the Executive Committee has a separate discussion to determine the Group’s material risks. These are shared with and reviewed by the Audit & Risk Committee and the Board of Directors and form the basis for the risk disclosures in this note below.
Our risk profile
The table below details the five most important Group’s short-term risks that might have a material impact within three years and have the potential to prevent us from successfully implementing our strategy and achieving our targets. For each of these risks, the mitigating actions we are taking to reduce our exposure are described. These risks are labeled as top risks either because the exposure on dsm-firmenich’s EBITDA is an indicative €45 million or more (cumulative 3 years), or because they have a major non-financial impact, such as on the company’s reputation.
Top material risks and description |
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Main mitigating actions |
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Exposure | Trend |
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Data management and digital transformation: Due to weak data governance and data management, we run the risk of data breaches compromising confidentiality and exposing the company to financial and reputational harm. In addition, due to the complexity of our digitalization roadmap and existing resource constraints, we run the risk that our digital transformation may not progress as planned, leading to delays or shortfalls in delivering targeted benefits. |
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High | ▶ |
Geopolitical instability: Due to geopolitical instability and related economic downturns, we run the risk of trade restrictions, raw material and energy shortages, and supply‑chain disruptions limiting our ability to serve customers. In addition, due to weaker economic conditions, reduced consumer spending, and inflationary pressures, we run the risk of lower demand, leading to adverse impacts on our sales volumes and margins. |
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High | ▶ |
Commodity markets: Due to operating in highly competitive markets where some competitors benefit from lower cost positions, we run the risk of insufficient differentiation, leading to adverse effects on our sales volumes and margins. |
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High | ▶ |
Cybersecurity: Due to persistently high external cyber threats, we run the risk of cyber‑attacks, leading to operational disruption and the loss of integrity or confidentiality of information. |
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Medium | ▶ |
Talent availability: Due to tight labor markets and ongoing macro‑economic pressures, we run the risk of being unable to attract, retain, develop, and engage employees with the expertise and mindset needed to implement our strategy, leading to potential capability gaps and reduced organizational performance. |
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Low | ▼ |