Identifying and managing risk are integrated into the management systems at Novozymes. We define risks as “events or tendencies that can prevent the company from achieving its overall targets – including financial, environmental, and social targets – or negatively affect our image or our future results and activities.”
Novozymes strives to identify risks as early as possible and, once they have been identified, we act and follow up on them.
This section describes a number of critical risks along with measures that Novozymes has implemented to reduce them. The list is not in any order of priority and is not exhaustive.
This year we have described financial risks in Note 36 to the financial statements.
Novozymes sells our products worldwide and is subject to the financial and political risks that this naturally entails. Growth in individual markets is therefore influenced by the local economic situation and local legislation. Novozymes works together with our agents, distributors, and other business partners to ensure that they know and do not violate Novozymes’ business integrity rules when selling our products.
A relatively small number of customers account for a high proportion of Novozymes’ revenue in certain product areas, which means that Novozymes is also affected by the trends in these customers’ markets. Novozymes works closely with its major customers to limit risks, for example by means of joint development projects and joint production planning, including the integration of IT systems.
Novozymes strives to maintain its position as market leader by continually launching new and improved, high-quality products that meet customers’ needs. Novozymes’ projected sales are not dependent on single large product launches, as we constantly have several new products in the pipeline. This places high demands on the Group’s research and development, requiring development to keep pace with customer needs. Failure here would entail the risk of a negative impact on Novozymes’ sales targets. Novozymes allocates around 14% of revenue to research and development to ensure sufficient resources for future innovation.
Novozymes produces a large number of enzymes using genetically modified organisms (GMOs). Without this technology, it would be necessary to use larger quantities of raw materials, water, and energy, and in many cases commercial production of an enzyme would not be profitable. The use of gene technology is the subject of ongoing debate around the world, mainly concerning genetically modified crops or foods containing GMOs. Novozymes’ use of gene technology has only featured in the debate to a limited degree, as the Group’s end-products do not contain GMOs. However, it is possible that Novozymes’ production and sales to the food and feed industries in particular may be affected by the public debate on gene technology and the impact this may have on consumer demand.
Read more about Novozymes’ use of gene technology at www.novozymes.com.