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Business-related risks

Business-related risks involve risks in the daily operations and the ability to perform undertakings made to customers. These risks can often be handled through internal control activities, such as preventative and/or monitoring controls.

Business-related risks include Balco’s ability to develop and sell new innovative products and solutions, the group’s ability to attract and retain qualified employees, and the risk that Balco’s profitability is dependent on the results of individual projects, i.e. the group’s ability to predict, calculate and deliver projects within the established financial framework.

Risks

Balco is dependent on its suppliers and subcontractors to be able to deliver an end product. The company carries out production in-house and its products consist of components and raw materials from several different suppliers.

1. Suppliers and subcontractors

Balco is dependent on suppliers and subcontractors to be able to deliver an end product. The company carries out production in-house and its products consist of components and raw materials from several different suppliers.

2. Project-based operations

Balco’s profitability is dependent upon the results of its individual projects. The calculations and plans made at the beginning of the projects are important both for future sales and profitability.

3. Disruptions in operations

Balco’s operations consist of many processes where a disruption to operations such as a fire, sabotage, machine breakdown, disruption in IT systems, can have consequences for the company’s ability to perform its undertakings towards its customers.

4. Recruiting

It is of the utmost importance to Balco, a growth company, to be able to attract and retain qualified employees and key persons.

5. Product development and production capacity

Balco’s earnings ability and competitiveness are dependent, to a certain degree, on the company’s ability to develop and sell new and innovative products and solutions. The company invests significant resources in developing its existing product portfolio. Since the company’s products are manufactured at its in-house production units, Balco has to stay one step ahead in order to be able to secure future production capacity and thereby create growth.

Risk management

1. Suppliers and subcontractors 

Balco has identified its strategic suppliers and subcontractors and ensured that there are available alternatives.
 

2. Project-based operations

Balco has a well-tested revenue recognition model and there are clear processes and routines for how projects are calculated and delivered.
 

3. Disruptions in operations

Balco has identified and secured redundancy for significant operations in its production. A review has been carried out of business-critical systems.
 

4. Recruiting 

The group endeavors to be an attractive employer with a competitive offering, both with respect to remuneration and benefits but also by creating a corporate culture which our employees enjoy being a part of. Balco is active on the market in order to attract personnel and has a clear personnel care program.

5. Product development and production capacity

Balco conducts project-based operations which means that the company has ample leadtimes and visibility with respect to the need for production and deliveries. The company follows up on all projects, outgoing deliveries, and production orders on a weekly basis. Since the lead times for the company’s projects are relatively long, this creates ample planning opportunity. Balco has an option for the expansion of its production unit in Poland.