Risk factors
It is important that Telenor and its operations take the necessary steps to manage and reduce risk factors, thereby ensuring that the overall risk is always kept within acceptable commercial limits. In 2006, Telenor created a dedicated Group Risk Management function.
Telenor’s activities are exposed to a number of commercial, operational, regulatory, legal, financial and political risks. If Telenor’s growth strategy in emerging markets in Central and Eastern Europe as well as Asia is to be successful and inspire the necessary confidence among shareholders and investors, then risk assessments and risk management must form part of the Group’s core expertise. Work on this was stepped up in 2006 through the creation of a dedicated Group Risk Manager function in Telenor.
Proper risk assessments
Risk factors are thoroughly assessed by Telenor’s Board of Directors and its Group Executive Management in connection with new investments, and they are an ongoing consideration in relation to existing investments. Telenor has gradually acquired considerable practical experience in the establishment and operation of activities in economically less-developed areas. Combined with a broad network of contacts, including authorities at home and abroad, Telenor believes that this provides a sound basis for undertaking proper risk assessments. The Group Executive Management has also carried out systematic reviews and evaluations of the Company’s investments in order to assess the development of individual activities in light of an updated risk scenario.
Telenor has sought to balance the risk associated with its investments outside Norway by dividing its portfolio between mature and emerging markets. Telenor is exposed to financial market risks related to changes in interest and exchange rates. Financial instruments are used to hedge against risks of this kind. The Group Executive Management has taken the necessary steps to maintain adequate financial flexibility.
