AAK Annual Report 2020

AAK Annual Report 2020 39 The scope of transition risks, such as changes in climate and energy policies, or shifts to low-carbon technologies and liability issues, was added to the site rating system during 2020. The outcome, including potential impacts and opportunities, will be presented to AAK’s Audit Committee that will escalate material information to the Board of Directors if the outcome has an impact on the organization’s objectives or overall strategy. The physical financial risk of climate change impact at AAK sites is today low to medium based on an assessment of extreme weather impact such as flooding, earthquake or heavy weather. Most sites have made the initial planning and investment with regards to physical risk which is why we will focus more on the transition risk going forward. The transition risk will be further defined once the updated scoring system has been implemented, but so far, the level of risk and impact from a financial perspective is evaluated as low to medium, depend- ing on development such as local actions taken by governments and countries themselves. Building the foundation for climate resilience During 2020, we have committed to set science-based targets, upgraded the site scoring system with transi- tion risk, and revisited the scope 3 screening to learn more about the impact in the supply chain. In 2021, we will define targets, deploy the site scoring system, enforce financial roadmaps made for scope 1 and scope 2 greenhouse gas emissions, and engage with our suppliers. This foundation and the next steps will enable us to disclose information in line with TCFD, strengthen the resilience to climate change, support our capability to reduce climate impact, and deliver sustainable value-adding solutions. For more informa- tion and an overview of our climate risk assessments, please see our Sustainability Report. Disruptions to critical IT systems AAK uses modern IT infrastructure and technology to support its business. Disruptions to critical IT systems could potentially have an impact on the business. Therefore, this is a risk that needs to be analyzed and mitigated with the objective to prevent possible issues and minimize impact. This work is conducted by Group IT together with our local entities. Our critical IT systems are audited annually, with security, internal processes and compliance in focus. Cyber security has a very high priority at AAK and in order to minimize external threats, we are continuously investing in technology that is operated by a highly skilled staff. The Group IT Security Policy is imple- mented at all AAK units, and a common framework is used for our global IT infrastructure. Changes in external factors Business operations are affected by raw material prices, transport costs, energy prices, interest rates, and exchange rates. Our employees are experienced in reacting quickly to changes in external factors and adapting operations, products and services to cus- tomer needs.