LFV Annual Report 2019 1
RISK MANAGEMEN T L F V 2019 Area (perspective in
the organisational plan) Operations and delivery Risk Total defence and robust aviation safety Description Approach Comprehensive work is under way within LFV in order to strengthen the defence and war capability and increase the robustness of the infrastructure based on the government mandate relating to total defence and a robust infrastructure. The mandate places major demands on the organisation with respect to resources and prioritisation. Cyber and information security Digitalisation in combination with a changed security policy situation has increased the risk for hacking and the need to protect sensitive information. Lack of resources LFV sees a major need for resources going forward due to implementation of new and far-reaching legal requirements in combination with the total defence planning and air traffic controller losses to pension. Increased traffic and a lack of international air traffic controllers also impact the need. Active recruitment work is in progress, but training takes time and it may be difficult to fine the right competence. Finances Performance plan (RP3) A new reference period begins in 2020 and the EU commission has not determined the Swedish performance plan yet. There is a risk that LFV does not achieve the goals, primarily with respect to capacity and cost-effectiveness, depending on the Commission's decision. Slowing of air traffic and slower development of the aviation market in the future in comparison with earlier forecasts is also a significant economic risk. A low interest rate and increasing pension liability affect costs and fees negatively. Currency risk Currency risk is defined as the profit/loss effect that a currency exchange rate can have on LFV's balance. Credit risk Credit risk is defined as the risk that the counterparty in a transaction is unable to meet their commitment. LFV has a large surplus liquidity associated with pension liability to manage. LFV's total defence planning continues and activities are in progress in order to enhance robustness in the air traffic service. LFV also coordinates and maintains a dialogue with other parties on which LFV is dependent. LFV works actively on resource matters and carries out extensive recruitment in order to fulfil needs. LFV has worked proactively this year to counteract risks to cyber security and information security. Activities have been carried out to further strengthen LFV's protective security with technical solutions, allocation of resources, expanded monitoring of subcontractors, training and development of improved procedures. LFV analyses future needs for resources within projects and in operations, where legal requirements, delivery and other undertakings come into consideration. LFV prioritises between existing and new projects. At the same time, activities to improve the capacity to prioritise with new work approaches and processes are also in progress. HR has developed a strategic long-term and short-term plan this year to ensure the supply of competence of engineers and air traffic controllers, and resource coordinators have been employed within operations. During the year, LFV has assisted the Swedish Transport Agency in development of documentation to report on local conditions, such as increased pensions costs and investment and resource needs in preparation for the definition of goals in RP3. In order to gain an audience, LFV has also participated in the consultations that the Swedish transport Agency has arranged. The risk is limited by hedging on the period of the known future flows. An interval controls at least a share hedged within a certain period. Hedging of en route fees takes place according to a special procedure. In order to limit the credit risk with investment, counterparties, instruments, term and permissible investment are regulated in LFV's financial policy. Investment may take place in treasury bills, state obligations, loans to banks with supervision of Finansinspektionen, certificates with counterparties wholly owned by the Swedish state or with equivalent creditworthiness K-1 and in obligations with counterparties wholly owned by the state or with minimum creditworthiness A (Standard & Poors) and A2 (Moody's). Other risks Fraud and corruption On the whole, LFV's protection against fraud, corruption, bribery and other inconsistencies is good. The main operations are regulated and monitored by the Swedish Transport Agency. LFV's organisation, procedures and delegations, rules and regulations, instructions and processes, etc. are defined and documented. There is additional documentation and a digital personnel guide that clarify the rules and regulations and position in these matters. Continuous information about corruption, fraud, bribery and other inconsistencies is published via intranet, and distributed to new employees and at leadership training. Corruption is included in a special part of LFV's code of conduct and a special section in the “Whistleblower” function that has been established. 67