Risk and risk management

VVO Group’s risk management is based on the company’s risk management and treasury policy, corporate governance and ethical guidelines, and the risk assessments carried out in connection with the annual strategic planning process. Risk assessments identify the most significant risks and define means to manage them.

The most notable risks associated with customer management relate to a potential drop in the rental occupancy rate, an increase in resident turnover and an increase in rent receivables. Factors affecting these risks include economic fluctuations and shifts in demand, both nationally and locally. The financial occupancy rate of rental apartments, resident turnover, the number of applicants and the amount of rent receivables and changes thereto are monitored by region on a monthly basis.

VVO Group is developing its rental operations and property renovation activities and strengthening its customer relations. These measures seek to maintain a high occupancy rate and decrease resident turnover.

Ensuring that the value of VVO’s housing stock continues to rise requires investments in growth centres and systematic renovations across all apartments and properties.

A drop in apartment prices can affect the fair value of property assets.

The financial risks associated with VVO Group’s business are managed in accordance with the treasury policy confirmed by VVO Group plc’s Board of Directors. The treasury policy defines the objectives of VVO Group’s financing activities, division of responsibilities, operating principles, financial risk management principles as well as monitoring and reporting principles. The objectives of VVO Group’s treasury function are to ensure the availability of financing, maintain liquidity cost-efficiently at all times and manage financial risks.

The most significant financial risks are associated with the availability and costs of financing. The refinancing risk is mitigated by diversifying the financing sources and instruments in the loan portfolio, spreading the maturity of loans and maintaining a strong balance sheet structure. The interest risk associated with the loan portfolio is managed by dividing loans between fixed and floating rate loans, by different interest rate renewal periods and by the use of interest rate derivatives. The company’s financial risks and risk management are described in more detail in Note 25 to the fi-nancial statements.

The most notable risks associated with properties are liability risks, such as water damage and fire. Liability risks are managed with appropriate preventive safety measures and by insuring properties against damage. VVO Group regularly reviews its insurance policies as part of overall risk management. The main insurance policies are property, liability, loss of profits, accident, travel and vehicle insurance.