Skip to content
Skip to search

Risk management

Sponda has adopted a systematic approach to risk management and the company’s key strengths is its ability to integrate risk management as part of the strategy process, the enterprise resource planning system and business processes. The responsibility for risk management is determined in accordance with business responsibility. The ultimate responsibility for risk management lies with the Board of Directors, which sets risk management objectives, decides on risk management policy, organises risk management and monitors key risks. Business units and corporate functions are responsible for arranging for risk management to be monitored and reported as part of the company's other reporting activities. The company’s internal audit function monitors the effectiveness of the risk management system.

Risk management is tied to the company’s annual planning process and risks are assessed in a risk survey carried out twice a year. The risk survey identifies the company’s key risks, assesses the probability of their occurrence and potential impacts thereof, and defines risk management procedures. The risk survey is updated every autumn in conjunction with budgeting. The Group’s risk management guidelines and the operations handbook are updated to reflect the decisions made on the basis of the risk survey. The risk survey also includes an assessment of the company's approach to risks.

Sponda’s toolbox of risk management includes risk aversion, risk elimination and reducing the probability of their materialisation. Risks can also be restricted and reduced. A business continuity and recovery plan has been prepared for the contingency that substantial risks materialise.

Main risks and risk management actions taken

Short-term risks related to Sponda's operations

   

Risk management actions

Fall in economic occupancy rate

   

Sponda’s property portfolio is mainly located in Helsinki’s city centre and the Ruoholahti district. The company spends approximately 1–1.5 per cent of the property portfolio value on modernisation investments each year. Sponda will place more focus on its rental operations.

Decline in tenants’ solvency

   

Sponda carries out regular checks to monitor tenants’ solvency and changes therein. Most tenants submit a security deposit corresponding to 3 to 6 months’ rent at the start of their tenancy. The company has a diverse tenant base representing a wide variety of sectors.

Interest rate risk

   

Sponda reduces its interest rate risk through fixed-interest loans and interest rate derivatives.

Exchange rate fluctations

   

Sponda receives half of its Russian rental revenue in US dollars and half in roubles. Most of the rents paid in roubles are tied to the US dollar or euro exchange rate. The exchange rate risk arising from the use of the rouble is reduced by the fact that a significant portion of the company’s own expenses in Russia is also paid in roubles. Sponda hedges a six-month cash flow from Russia. The company’s investments in Russia are mainly funded in euros from the parent company balance sheet.

Special features of the Russian property

market

   

Sponda is a local operator with offices in Moscow and St. Petersburg. Networking and good relationships with the authorities are important for business operations. The company’s strategy in Russia is to invest in highquality properties in prime locations.