Risk management and principal risks

The objective of Talvivaara’s risk management is to support reaching of the Group’s strategic and operations targets while protecting the company against loss, uncertainty, and lost opportunity. There is an on-going process in place, supported where necessary by external advisors, for identifying, evaluating, and managing the significant risks facing the Talvivaara group. The Audit Committee is responsible for assessing and the Board of Directors for reviewing the effectiveness of the systems for the identification and management of risk. Risk management policies and responsibilities

In line with current corporate governance guidelines on risk management, Talvivaara carries out an on-going process endorsed by the Board of Directors to identify risks, measure their impact against certain assumptions, and implement the necessary proactive steps to manage these risks.

The CEO, the Executive Committee, and the Risk Management Committee as its subcommittee are responsible for specifying and implementing day-to-day risk management procedures and ensuring that risks are taken into account in the Group’s strategic planning. The Executive Committee coordinates risk management activities and risk reporting in the Group.

In 2011, the Group’s risk management principles were updated to reflect Talvivaara’s current stage of development as the company has evolved from a project into a fully producing mining operation. In order to develop and harmonize the process of defining risks and areas of responsibility, as well as apply the risk management process at Group-level, the company developed a comprehensive risk management policy (Enterprise Risk Management, ERM). A Group level risk assessment framework was created to assist in defining the likelihood and estimated impact of risks, which also forms a common basis for risk reporting and risk management.

Talvivaara divides its risks into four main categories: strategic risks; operational risks; financial and economic risks; and environmental risks, occupational health and safety risks, and risks of damage.