Risk management is part of DNA's strategy process and corporate governance. It is guided by the risk management policy approved by the Board of Directors.
Risk refers to events or circumstances which, if they materialise, could affect DNA's ability to achieve its strategic targets or the operative targets derived from them. DNA's risk management is based on the policy adopted by the Board of Directories, defining the objectives, process, main duties and responsibilities of risk management.
The risk management process provides reports on risks and their control methods to the executive management and Board of Directors, interim reports and strategy work. The risk management process is part of the DNA management process. The Board of Directors is responsible for company's risk management and approves the risk management policy. The CEO is responsible for the practical implementation of risk management and maintenance of the risk management policy.
Risk management is an essential part of the planning and control of business operations. The company includes a description of significant risks and uncertainties, of which the Board of Directors is aware, in its annual and interim reports.
Significant near-term risks and uncertainties
Strategic and operative risks:
DNA operates in the Finnish telecommunications market, which is characterised by tough competition between established operators and a high degree of penetration of telecommunications solutions. DNA is increasing its emphasis on new business. Starting up new business operations always involves higher risks than conventional and established business operations. In addition, new services must be productised quickly and cost-efficiently. The rapid phase of technological development affects the entire telecommunication industry and DNA's operations.
Alongside traditional communications methods, technological development and new types of terminals can create new revenue models. Customer behaviour can change rapidly if new services are reliable and easy to use.
As new communications methods gain widespread popularity, they have an impact on the traditional business of operators. Applications, such as global IM applications, are changing the way people communicate. On the other hand, new communications methods can provide new opportunities for operators, by increasing the use of mobile data, for example.
The competitive environment has changed quickly, in particular for entertainment services, as strong international players have entered the market. DNA faces competition from many providers of TV services: cable and terrestrial TV service providers similar to DNA as well as service providers that use other distribution channels, such as satellite and OTT services (Apple TV, GoogleTV and Netflix). DNA monitors the entertainment service market closely and continuously enhances its service offering to anticipate changes in the market.
Uncertainty related to the overall economic situation has not abated, affecting the demand for smart phone and TV services and the corporate market. General decline in purchasing power has a post-cyclical effect on the operator market.
System and network risks:
The nature of DNA's operations and customer expectations place high demands on DNA's systems and network infrastructure. DNA's business is capital-intensive, and the company's success depends on the ability to continuously maintain and improve its network infrastructure. To optimise the availability of its communications services, DNA employs a range of methods. These include establishing back-up solutions for critical transfer connections, by using at least two different routes. Other methods involve duplicating and decentralising the main data centre and communication service systems in the company's equipment facilities.