Operational risks are directly attributable to business operations with a potential impact on earnings and the financial position. Operational risks can normally be influenced and are often linked to the organisation’s processes, working methods and skills.
Purchasing of products
Clas Ohlson currently purchases just over 40 per cent of the company’s products in Asia, the majority from China. The proportion of purchasing from Asia will increase through the company’s own purchasing company in China. This will boost the company’s competitiveness. There is a risk of bribes and corruption in the purchasing process, and suppliers in low-wage countries entail increased risk of shortcomings in working conditions and respect for human rights. Increased single-country exposure entails greater risk (political risk, transport risk, currency risk and so forth).
Clas Ohlson’s Code of Conduct and ethical guidelines apply to all our suppliers and contracts. We have our own audit teams in China that conduct inspections and monitor compliance with the requirements of our Code of Conduct. Since the start of 2017, Clas Ohlson has been part of Sedex in order to further increase transparency regarding responsible purchasing. Clas Ohlson works continuously on evaluating new potential purchasing markets in both Europe and Asia.
Our business model constitutes a potential negative impact on people, the environment and society.
Even if these risks lie outside our direct operations, the consequences of not addressing them could impact Clas Ohlson’s reputation as a meaningful, trustworthy brand. They can also impact the confidence employees have in us as an employer and our market position, disrupt production and deliveries, incur unforeseen costs and cause violations of the law.
Sustainability is an integral part of our business model and governance. The foundation of this work is our Code of Conduct and our ethical guidelines.
For a further description of the company’s risk in the field of sustainability, see our Annual and Sustainability report, pages 136–137.
Clas Ohlson’s operations are highly dependent on IT support. As a result, it is essential that IT systems provide effective support for the company’s day-to-day operations and maintain a high level of reliability. It is also important to ensure efficiency and provide support in the decision-making process.
Infringements or deficiencies in processing customer information, employee information or business-critical data can lead to decreased confidence and entail a negative impact on the Group’s earnings.
During the financial year the new business system was implemented (sCORE).
Clas Ohlson has an IT policy and an information security policy. In the event of new legislation or new regulations, the actions to be taken will be decided well in advance. There are standardised processes for implementing new systems, for changing existing systems and for daily operations.
Clas Ohlson works actively to ensure that personal data is processed securely pursuant to the applicable regulations and a comprehensive work with GDPR has continued during the year.
Clas Ohlson’s distribution centre in Insjön is the hub of the Group’s distribution chain. Goods from suppliers in Europe and manufacturers in Asia come here to be distributed to all our shops and our online customers. Collecting the logistics in one location carries certain risks, for example, disruptions to communications and infrastructure, as well as fire and strikes.
A large proportion of the company’s carbon dioxide emissions are associated with transportation of products.
We are working on maintenance and inspection of systems, fire protection and security systems, etc.
The Group also works continuously with inspection of the distribution chain to ensure efficiency.
Clas Ohlson must have motivated and skilled employees in order to achieve the set goals and strategies. The geographic location of the main office and large parts of our operations at Insjön could result in difficulties in recruiting employees with the right expertise. Our growth also places great demands on recruitment, skills development and internal mobility.
Clas Ohlson’s new strategic orientation entails a certain adaptation of competence, which could impact our employees and our ability to attract new employees with the right skills.
Clas Ohlson works for diversity and increased flexibility. Clas Ohlson is a workplace where employees can develop and grow with the company. Leadership, skills development and the company’s belief in individual employees equips the company for the future and cultivates an organisation prepared to shoulder new challenges.
We have a zero tolerance policy for all forms of discrimination and harassment.
Clas Ohlson leases the premises where shops have their operations. Contract periods vary, depending on the market.
Clas Ohlson endeavours to have flexible leases with the opportunity for re-negotiation during the lifetime of the contract.
Clas Ohlson is exposed to shrinkage – shoplifting, for example – on a daily basis.
The Group implements long-term preventive measures to reduce shrinkage, using such methods as training initiatives and technical equipment. In addition, security efforts are continually monitored, evaluated and adapted Clas Ohlson invests continually in further enhancing the efficiency of its logistics and the work in the distribution centre.
The company operates in a context where laws and regulations undergo continual change, becoming more complex. Deficiencies in interpretation or compliance can damage the company’s reputation and result in fines or other sanctions.
Clas Ohlson has an ethical approach and well-functioning internal controls. In the event of new legislation or regulations, the actions to be taken will be decided well in advance of the regulations being implemented.