Svenska Spel

Risks and risk management

Risks are defined as uncertainties that can impact Svenska Spel’s ability to achieve its goals. By taking a structured approach to risks and risk management, Svenska Spel ensures strong internal governance and control to minimize surprises and to identify ­necessary initiatives.

At Svenska Spel, the overall corporate risk-management process is integrated with the regular process for business planning and operational follow-ups. The Company’s mandate serves as the foundation, based on which goals and activities are specified in an overall business plan, and in business plans for each result area and staff function. These business plans with defined goals serve as the basis for identifying and addressing risks.

In addition to its financial risks, Svenska Spel divides its greatest risks into three overriding risk areas: Industry and market risks, Business risks and Operational risks.Presented below are Svenska Spel’s most important risks related to these areas. A single risk can naturally influence one or more of Svenska Spel’s goals. Respon­sible gaming is a key and central element of Svenska Spel and the risk management efforts are particularly mindful of the risks that have an impact on responsible gaming.

Industry and market risks

Industry and market risks are defined as external risks to which Svenska Spel is exposed and that derive from the structure of the industry and the properties of the gaming market.

The risks in this area primarily include a re-regulation of the gaming market, or the implementation of new permit restrictions, which could have an impact and ultimately require the business to be operated under new conditions. Svenska Spel maintains an ongoing dialogue with its owner and other stakeholders to prepare for any changes in terms and conditions, and to be able to contribute insight and knowledge ahead of potential re-regu­lation.

Another risk that Svenska Spel must take into account and manage is the competition from new companies in conjunction with the industry changing. New competition and new constel­lations among the competitors emerge in a rapidly changing ­sector. Naturally, this requires Svenska Spel to continuously develop relevant and attractive customer offerings.

Business risks

Business risks are defined as risks that are related to how the business is operated and how Svenska Spel competes in the market. One business risk that has been identified is the possibility of future marketing restrictions in the Company’s permits, which can impact its ability to compete in the market on equal terms and ultimately realise the Company’s mandate. This requires Svenska Spel to constantly apply caution in the design and extent of its marketing activities.

There is also a risk that the Company will not be able to offset its competitors’ investments in media purchases in the event of increased competition, which will lead to a lower "share of voice" and probably ultimately contribute to a decrease in market share.

Operational risks

Operational risks pertain to internal risks that are related to how the business is operated in the aim of achieving the established goals.

A shift in customers’ gaming behaviour toward faster and more Internet-based games poses a challenge for Svenska Spel. One of the major operational risks that impacts the Company’s ability to maintain its position as the market leader is the ability to satisfy customers’ demands for digital solutions. Accordingly, maintaining a high pace of development in digital platforms and system design is a prioritised area for Svenska Spel in offsetting this risk and to be able to offer customers the gaming experiences that they want.

The risk of technology problems that give rise to gaming disruptions or other inconveniences could have major consequences for the Company and thus its ability to maintain excellent customer service. This is a highly prioritised risk that is well managed within the Company through a number of activities and actions aimed at reducing the probability and consequences of possible service interruptions.

Financial risks

The financial risks including interest-rate, credit and liquidity risks are limited. The Group has strong liquidity and no interest-bearing liabilities. The Group has negligible exposure to exchange-rate and currency risks, since its essential sales and purchases are ­conducted in SEK. The financial risk management is governed by Svenska Spel’s Financial policy. For other information, please refer to Note 10.