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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 minimise 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 and activities serve as the basis for identifying and addressing risks. The risk ­management process at Svenska Spel is as illustrated below:

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’s operations 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. A risk in this area is that re-regulation of the gaming market is delayed and that during that period Svenska Spel is subjected to possible new permit restrictions that negatively impact the company’s prerequisites for fulfilling its mandate. Furthermore, the parallel risk of increased competition from unregulated gaming companies that can market themselves and act freely in the market. 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.

An additional risk that Svenska Spel must address is that the un­regu­lated competition gains increasing acceptance among ­consumers.

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 identified business risk is that Svenska Spel, despite being at the forefront in terms of responsible gaming, is unable to reach the desired goal of being a clear role model for the market. A number of activities are currently ongoing to create a standardised and ­consistent approach to responsible gaming that aims at further strengthening consumer protection.

As Svenska Spel is restrictive in its marketing and is subject to clear restrictions in its permits, a risk exists that the company will not be able to hold its own against the competition. The unregulated gaming companies’ extensive investment in advertising and exposure of bonuses impairs possibilities for channelling customers to Svenska Spel, which will, over time, lead to a reduced 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-intensive 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 internal delivery capacity to satisfy customers’ demands for new digital services. Accordingly, maintaining a high pace of development is a prioritised area to be able to offer customers attractive gaming experiences with interesting services and products.

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.

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