Risks, exposure and risk management

Castellum defines risk as an uncertainty factor that may affect the company’s ability to achieve its objectives. Risk management aims at balancing the desire to limit risk and achieving objectives. In order to assess the effect of identified risks, an internal risk rating is conducted in which each risk is assessed, from the perspectives of impact and probability. This process determines if the risk should be further monitored (Monitor), if actions should be taken (Focus) or if it can be handled through standard review and management (Review). Castellum conducts an annual risk survey in which all the company’s risks are assessed based on likelihood, impact, priority and development. Short- and medium-term risks are analysed for a period of up to 10 years.

Over the last several years, Castellum has also worked on analysing various future climate-related risks and possibilities over the long term up through 2050.

To facilitate risk management, Castellum has chosen to classify risks into the following categories:

  • Business environment – risks due to the influence of external factors and events.
  • Strategic risks – risks associated with reputation or the ownership of Castellum’s asset portfolio.
  • Operational risks – risks associated with routine administration of Castellum’s property holdings.
  • Sustainability and climate risks – risks associated with the environment, corporate responsibility and/or liability risks.
  • People – risks associated with our employees and the people in and around our properties.
  • Financial risk – risks in Castellum’s financing and reporting.

RISK CATEGORY

 

RISK

 

IMPACT

 

PROBABILITY

 

PRIORITY

 

CHANGE

BUSINESS ENVIRONMENT

 

 

 

 

 

 

 

 

 

 

Macroeconomic risks

 

1. Macro – crisis

 

Serious

 

Likely

 

Focus

 

Crises

 

2. Crises

 

Medium

 

Likely

 

Focus

 

Changes in legislation

 

3. Changes in legislation

 

Medium

 

Certain

 

Focus

 

 

 

4. Regulatory compliance

 

Serious

 

Possible

 

Focus

 

STRATEGIC RISKS

 

 

 

 

 

 

 

 

 

 

Composition of the asset portfolio

 

5. Composition of the asset portfolio

 

Major

 

Unusual

 

Monitor

 

 

 

6. Obsolete product/property

 

Medium

 

Likely

 

Monitor

 

 

 

7. Size – too big in a sub-market/area

 

Minor

 

Unusual

 

Review

 

Reputation

 

8. Brand

 

Major

 

Low

 

Monitor

 

 

 

9. Digitialisation

 

Medium

 

Possible

 

Monitor

 

Investments

 

10. Investments

 

Major

 

Likely

 

Focus

 

 

 

11. Strategic acquisitions

 

Serious

 

Possible

 

Focus

 

Changes in value

 

12. Changes in value – property

 

Serious

 

Certain

 

Focus

 

OPERATIONAL RISKS

 

 

 

 

 

 

 

 

 

 

Rental income

 

13. Rental income

 

Medium

 

Possible

 

Focus

 

 

 

14. Dissatisfied tenants/customers

 

Serious

 

Low

 

Focus

 

Property costs

 

15. Property costs

 

Insignificant

 

Possible

 

Review

 

Tax

 

16. Tax

 

Major

 

Low

 

Review

 

SUSTAINABILITY RISKS

 

 

 

 

 

 

 

 

 

 

Sustainability

 

17. Operational environmental risks

 

Serious

 

Low

 

Focus

 

 

 

18. Risks attributable to climate change

 

Medium

 

Possible

 

Monitor

 

 

 

19. Breach of the Code of Conduct

 

Serious

 

Low

 

Focus

 

 

 

20. Liability risks

 

Major

 

Possible

 

Monitor

 

PEOPLE

 

 

 

 

 

 

 

 

 

 

People

 

21. Employees

 

Serious

 

Likely

 

Focus

 

 

 

22. People

 

Serious

 

Likely

 

Monitor

 

FINANCIAL RISK

 

 

 

 

 

 

 

 

 

 

Financing

 

23. Financing

 

Serious

 

Possible

 

Focus

 

Reporting

 

24. Reporting

 

Serious

 

Unusual

 

Focus

 

Changes in value

 

25. Changes in value – derivatives

 

Medium

 

Likely

 

Monitor

 

 

 

 

 

 

 

 

 

 

Reduced focus on risk area since previous year

 

 

 

 

 

 

 

 

Unchanged focus on risk area since previous year

 

 

 

 

 

 

 

 

Increased focus on risk area since previous year