1.12 Foremost risks

Since Fingrid plays a significant role in Finnish society, the impact of risks is assessed from both the company’s and society’s perspective. Strategic risks are considered to be events that may lead to a material deterioration in the company’s ability to operate or in its corporate image or, in the worst-case scenario, events that may lead to the company’s operations being called into question by society.

The most significant of the company’s three identified strategic risks is a severe disturbance related to the functioning of the power system, leading to a regional or Finland-wide loss of electricity supply. Extensive disturbances to the power system can be caused by a technical malfunction, an extreme weather event, human error, an accident or vandalism. The consequences of a major disturbance are the paralysis of society’s functions and major damage to Finnish business and industry.
Financial regulation directly impacts shareholder value, financing and credit ratings. A significant negative change in regulation constitutes a material strategic risk for the company’s business operations.

The third strategic risk for the company’s operations is the possibility of a distortion in the corporate culture under the monopoly’s protection, which can surface in the form of disregard for sustainability requirements or other unprofessional behaviour.

In addition to strategic risks, business risks identified as substantial, such as accident, asset, information security, procurement, regulatory interest rate and counterparty and refinancing risks, are reported to the company’s Board of Directors.

Fingrid’s risk management and foremost risks are explored in greater detail in the company’s annual report and on its website. Fingrid’s financing risks are described in more detail in sections 6.2 and 6.3 of the consolidated financial statements. No substantial risks were realised in 2019.