LFV Annual report 2018 1
L F V 2018 RISK MANA GEMENT Area (perspectives in
business plan) Risk Total defence Description Approach National defence activities are under way at LFV in order to improve defence and crisis-response capabilities, which is part of LFV's appropriation directions and commission. Resuming total defence activities places great demands on our resources and finances. Existing legislation, resource issues and dependencies on third parties that do not have a national defence mandate currently limit our ability to accomplish all intended tasks. Cyber and information security Digitalisation, combined with a new security situation, has increased the risk of data breaches and the need for protecting sensitive information. A project on LFV’s national defence planning has been completed, and the action plan that was developed will be broken down into activities to be handled by line management. A dialogue is taking place with the Ministry of Enterprise and Innovation about funding, and with the Swedish Transport Agency about changes to the laws and regulations. LFV also collaborates and communicates with other parties it is dependent on. During the year, LFV worked proactively to prevent risks relating to cybersecurity and information security from occurring. Activities are under way to further improve LFV’s security through technical solutions, resource allocation, extended supervision of subcontractors, training courses and improved procedures etc. A program has been set up to take care of the activities required to meet the requirements in the commission for robust air navigation services. Lack of resources LFV believes that more resources will be needed in the future due to the necessary implementation of extensive new legal requirements combined with national defence planning and many air traffic controllers going into retirement. Increased traffic and an international shortage of air traffic controllers also add to the need. Recruitment began at the end of 2018, but it takes time to train people and it can be difficult to find the right skills. Customers and sales Establishment on the international market Finances Performance plan (RP2 and RP3) Strong competition on the international market, lack of resources and other factors have made it difficult for LFV to establish itself internationally. LFV has so far achieved its cost-effectiveness targets (excluding uncontrollable pension costs) in the performance plan, which, among other things, regulates en route charges. In the coming reference period (RP3), the EU are likely to require a further reduction in unit costs. There is a great risk that LFV will not be able to comply with future requirements. Currency risk Currency risk is defined as the effect that exchange rate changes have on LFV’s result. LFV is analysing future needs for resources in projects and it’s operational activities, where legal requirements, delivery and other commitments are considered. LFV will prioritise between ongoing projects and new ones. At the same time, by means of new working methods and processes, activities are under way to improve the ability to prioritise. During the year, HR reviewed our skills supply and skills planning, and work is being done on a short and long-term plan regarding the need for engineers, air traffic controllers etc. The business case for working internationally will be reviewed and updated. Work is being done to coordinate efforts relating to skills supply and competence development in order to address the resource needs. During the year, LFV assisted the Swedish Transport Agency in producing documentation for reporting local circumstances, such as increased pension costs, and investment and resource needs before targets are set for RP3. In order to gain support, LFV has also participated in studies, surveys, seminars, consultations and more. The risk is limited through forward currency hedging for known future flows. A range controls the smallest proportion secured within a certain period. Currency hedging of en route charges is done according to a special procedure. Credit risk Credit risk is defined as the risk of the counterpart in a transaction not being able to fulfil their commitment. LFV has significant surplus liquidity to manage due to the pension liability. To limit the credit risk with investments, counterparties, instruments, terms and permitted investments are regulated in LFV’s financial policy. Investments can be made in treasury bills, deposits with banks supervised by Finansinspektionen, certificates with counterparties wholly owned by the Swedish State or with a credit rating of K-1, and in bonds with counterparties wholly owned by the Swedish State or with a credit rating no lower than A (Standard & Poor), and A2 (Moody’s). Other risks Fraud and corruption Overall LFV is considered to have good protection against fraud, corruption, bribery and other irregularities. Our core operations are regulated and monitored by the Swedish Transport Agency. LFV’s organisational structure, rules of procedure, delegation arrangements, regulations, instructions, processes, etc. are defined and documented. Additionally, there are further documents and an electronic staff handbook that help to clarify the regulations and approach taken in these matters. Current information about corruption, fraud, bribery and other irregularities is published periodically via the intranet and shared when new employees are taken on and when managers are trained. Corruption is included as a separate section in the LFV Code of Conduct and as a special section in the "Whistleblower" function that has been set up. 68