Enterprise risk management setup


Audited by PwC

Long-term scenarios

Executive Management conducts an annual evaluation of opportunities for future growth. This evaluation is based on reports on long-term scenarios for each of the business areas, supplemented by selected key scenarios. The reports contain sensitivity analyses and, for expansion projects and larger investment proposals, an estimate of the net present value of the investment.

Part of this scenario work involves identifying potential bottlenecks for future growth, such as the need to expand production capacity and the availability of resources such as water.

Some of the scenarios presented to Executive Management spring from risks identified by the enterprise risk management setup.

Enterprise risk management setup

As well as the activities mentioned above to identify risks, Novozymes has a formal process to continually map and mitigate risks. All business units and vice presidents systematically report new risks and any changes to previously defined risks. This process, which is headed by the Vice President of Finance, ensures that top management has a high level of risk awareness, with involvement and ownership throughout the organization.

Reported risks are collated and mapped by the Risk Management Office on the basis of probability and possible consequences. Risks are assessed on the basis of both financial and reputational impact, and the reporting covers both financial and nonfinancial risks.

The aim of risk management at Novozymes is to ensure proactive management of key risks, so that efforts to reduce both probability and unwanted consequences will be made where possible.

Every six months, risks are reported to the Risk Management Office. These are then assessed, and a shortlist of approximately 30 risks judged to be the most significant is reported to Executive Management. Twice a year, the most significant risks are also presented to and discussed with the Board of Directors.

This systematic and analytical approach to risk management enables Novozymes to achieve greater transparency and gives a stronger basis for making decisions about investing resources. In addition, it provides Executive Management with the opportunity to discuss risks and undertake the necessary actions in relation to the Group’s risk profile.

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