Risk management

All business operations involve risk – managed risk-taking is a condition of maintaining a sustained favorable profita­bility. Risk may be due to events in the world and can affect a given industry or market. Risk can be specific to a single company.

At the Volvo Group work is carried out daily to identify, measure and manage risk – in some cases the Group can influence the likelihood that a risk-related event will occur. In cases in which such events are beyond the Group’s control, the Group strives to minimize the consequences.

The risks to which the Volvo Group are exposed are classified into three main categories:

  • External-related risks – such as the cyclical nature of the commercial vehicles business, intense competition, changes in prices for commercial vehicles and government regulations.
  • Financial risks – such as currency fluctuations, interest levels fluctuations, valuations of shares or similar instruments, credit risk and liquidity risk.
  • Operational risks – such as market reception of new products, reliance on suppliers, protection and maintenance of intangible assets, complaints and legal actions by customers and other third parties and risk related to human capital.

The financial risks and a few additional operational risks are described in the Volvo Group’s Annual Report 2012.