Risk Management System

Austrian Post operates a comprehensive risk management system integrating all business units and subsidiaries. This risk management system complies with the COSO standard “Enterprise Risk Management –Integrated Framework” in the version dated June 2017. The objective of risk management is to identify risks at an early stage, to analyse, assess and support through appropriate measures for the company to achieve its business tasks. Risks are identified, evaluated, monitored and documented in their overall context by a Group-wide risk management system in accordance with uniform principles. The Management Board defines the risk strategy and policy of the company and sets out a framework for the risk management system.

Austrian Post’s risk policy focuses on safeguarding and sustainably increasing enterprise value and is incorporated into the corporate and sustainability strategy. Austrian Post is exposed to numerous risks. As a result, Austrian Post is prepared to take risks provided that the resulting portfolio of opportunities and risks is well-balanced and that they remain within the company’s legal conditions and fundamental ethical values. The goals of safeguarding and achieving a sustainable increase in enterprise value must not be jeopardised. For those risks that cannot be avoided, control measures are taken to safeguard and sustainably increase enterprise value.

The most important steps in the risk management process are presented below:

  1. Identification and Evaluation:
    Risks are defined as a potential deviation from business targets. For each identified risk, a decision is made on who is responsible for evaluating, managing and monitoring that risk. Every six months, the risk management officers in the individual areas of the company assist in analysing and updating the risk situation. Within the context of analysis and evaluation, risks are defined in scenarios and are subsequently quantified to the greatest possible extent with respect to the dimensions of potential consequences and probability of occurrence. Non-quantifiable risks are evaluated on the basis of pre-defined qualitative criteria. In addition, the central risk management team provides periodic support to the individual business areas in the form of proactive risk assessments and workshops with regard to their risks. The results of the identification and evaluation process are documented in a specially designed risk management software.

  2. Aggregation and Reporting:
    The central risk management team gathers and reviews the identified and evaluated risks. The financial impacts of potential overlap are taken into account in the aggregation process. The overall risk position of Austrian Post Group is determined by using statistical methods. The risk portfolio is also analysed by a Risk Management Committee and is subject to a plausibility check. The Risk Management Committee is composed of representatives from governance functions, including Corporate Social Responsibility, and operational functions. The results are integrated in the half-year report of the central risk management team to the Management Board focusing on risks and their development. Risks which arise unexpectedly are immediately reported to the Management Board on an ad-hoc basis. The Supervisory Board and Audit Committee are also regularly informed about the risk situation.

  3. Design of Measures:
    The control of risks is based on defining appropriate measures aimed to avoid or reduce risks or otherwise transfer them to third parties. The business areas examine the potential measures on the basis of a cost-benefit analysis, and subsequently implement them. These measures are monitored and adjusted as a part of semi-annual analysis. Austrian Post Group operates internal insurance management to systematically deal with insurable risks. Its primary responsibility is to continuously optimise the insurance status and processes relating to the handling and settling of claims.

  4. Monitoring and Control:
    In conformity with Austrian Corporate Governance Code, the reliability and performance of the risk management system are subject to an annual assurance evaluation by the auditor. Moreover, the concept, suitability and effectiveness of the risk management system are evaluated, monitored and controlled on a regular basis.

Austrian Post’s risks and opportunities result from the overall risk environment and from trends that the company is exposed and changes it faces.

  1. Environmental, Social and Governance (ESG) Risks
  2. E-Substitution of Traditional Letter Mail
  3. Staff Costs and Structure of Employment Contracts
  4. Implementation of Pricing Measures
  5. Decline in Direct Mail Volumes
  6. Parcel Market
  7. Logistics Cost Risk
  8. Associates in Logistics
  9. Financial Services / bank99
  10. Turkey/Aras Kargo
  11. Financial Risks
  12. Technical and Cyber Risks
  13. Regulatory and Legal Risks
  14. COVID-19 Pandemic

Further details about Significant Risks faced by Austrian Post can be found in the current Annual Report.

The risk management system aims to identify, analyse and evaluate opportunities as well as risks at an early stage, and to exploit the corresponding opportunities by taking appropriate measures. The identification, evaluation, management and reporting of opportunities takes place in line with the previously mentioned process. Significant opportunities for Austrian Post are presented below. They are allocated to specific strategic areas based on the new integrated corporate and sustainability strategy, which was updated in 2020. The strategy consists of three cornerstones: “Defending Market Leadership and Profitability in the Core Business”, “Profitable Growth in Near Markets” and “Development of Retail and Digital Offerings for Private Customers and SMEs”. Sustainability is at the core of the new integrated corporate and sustainability strategy, framed with the three cornerstones referred to above.

In the first strategic pillar – Defending Market Leadership and Profitability in the Core Business – the expansion and adaptation of Austrian Post’s product portfolio in the Mail and Parcel Divisions in accordance with customer requirements is considered to be an opportunity. Various value-added physical and electronic services are continuously expanding the range of services offered by Austrian Post. Ongoing e-substitution has already been taken into account within Austrian Post’s planning, in which case the more moderate decline in mail volumes in Austria compared to original expectationsis seen as an opportunity. Opportunities predominantly arise as a result of the growth of e-commerce. In this respect, Austrian Post stands out due to its new, quick and lean solutions for online orders. Austrian Post has clear competitive advantages with respect to its quality and cost structure. Furthermore, measures to optimise staff costs could provide positive impetus.

In the second strategic pillar – Profitable Growth in Near Markets – opportunities arise primarily from Austrian Post’s equity investment portfolio. The foreign associates operate primarily in the parcel sector and are also reaping the benefits of increasing e-commerce. The subsidiary Aras Kargo offers particularly strong opportunities due to the size and development potential of the Turkish market.

In the third strategic pillar – Development of Retail and Digital Offerings for Private Customers and SMEs – there are for example, opportunities in the development of online and self-service offerings as well as in new business models in the area of e-commerce; in particular, Austrian Post has an opportunity to participate in the dynamic online retail trend through its subsidiary Post E-Commerce.

For information on ESG-related opportunities, please also refer to the Nonfinancial Report.

The company continuously monitors the above described risks and opportunities. In response, appropriate measures are carried out and initiatives launched. Overall, the pandemic is expected to result in increased uncertainty in both a positive and a negative sense. A look at the company’s main opportunities and risks shows that, while the issues that Austrian Post is facing are changing and shifting, the company’s opportunities and risks are stable overall. As a result, there is no threat to the company’s existence from today’s perspective.