The risk assessment process – endorsed by the Solvay’s Board of Directors – helps the Group achieve its business objectives, both financial and extra-financial, while respecting laws, regulations, and the Solvay Code of Business Integrity.
Solvay’s Enterprise Risk Management (ERM) approach is a key mechanism for achieving short, medium-, and long-term objectives.
Solvay’s business is diverse, entrepreneurial, and international. Operations face a number of significant risks. Accordingly, Solvay has designed a dynamic process in which key players assess the risks in their area of responsibility and/or expertise.
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All GBUs conduct risk assessments as an integral part of their annual strategic review process
Monitoring of risk management actions
Critical risks for the Group are closely monitored by the Group Risk Committee – members of the Executive Committee are appointed as Risk Sponsors – to ensure that these risks are adequately addressed. Particular attention is paid to cross-checking the analysis with the materiality analysis performed by the Sustainable Development & Energy Function.
Solvay’s systematic risk management approach is integrated within its strategy, business decisions, and operations. It ensures that Group leaders proactively identify, assess, and manage all potentially significant risks. Risk assessment helps create value in the short, medium, and long term, and always takes sustainability into consideration. Two of the four main impact types used to assess risks reflect our growing sensitivity to extra-financial issues, namely impacts on people and on the environment. The other two – economic and reputational impacts – directly affect the Group’s operational and financial performance. In line with Solvay’s strategic objectives, risks are then categorized as follows: “main risks” (rated as the most critical), “emerging risks”, and “other risks”.
Impact on people
Impact on the environment
Impact on reputation
Implementation of risk management actions
Risk management is a key success factor for Solvay. Improvements to Solvay’s Enterprise Risk Management methodology are allowing individual GBUs and Functions – and the Group as a whole – to more effectively prioritize risks and focus their risk response. A dedicated dashboard is updated twice a year to reflect both progress on mitigating actions and new developments in the risk environment.
Deciding how to manage critical risks
Both day-to-day and strategic decision-making take all key risks and opportunities fully into account using financial and extra-financial criteria.
A sound risk management system embedded at all levels of the Group
GBUs and Function leaders are accountable for identifying, monitoring and managing the key risks in their domains. Risk management is therefore strongly embedded in the day-to-day running of each entity, and operational managers can react rapidly when circumstances change. The risk management process is a valuable mechanism for GBUs and Functions because it guides their priorities and makes it more likely they will achieve their business goals.
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Global Business Units
Board of Directors
- Reviews and updates its own
- Defines risk owners to lead
mitigation of most critical risks
Identifies a list of Group risks – the most relevant ones – to be submitted to an assessment phase
Assesses, decides on, and closely monitors these Group risks
Each of these Group risks is sponsored by an Executive Committee member
Oversees and endorses
Corporate Risk Department
Supports and coordinates risk management throughout Solvay
Executive Committee, GBU Presidents, Function General Managers, Zone Presidents, and Solvay Business Services General Manager
General Managers for the Industrial, Legal, and Sustainable Development & Energy functions
Group level risks are managed with contributions from the Senior Leadership Team for identification, the Group Risk Committee for assessment, and the Executive Committee members for sponsorship for treatment and risk response. The Audit Committee meets once a year with the Chairman of the Executive Committee, the CEO, and other members of the Board to discuss the major risks facing the Group. During the year, the Audit Committee benefits from Risk Owners’ presentations on Group risks, for example on industrial safety, security, cyber risk, ethics, and compliance.
Assessing major projects linked to Solvay’s transformation
An appropriate risk assessment methodology is applied to significant projects, such as acquisitions, major capital investments, and transversal projects.
Internal control is one aspect of risk management. Please refer to the Corporate Governance section of this Annual Report for a detailed description of Solvay’s risk management and internal control system.
Crisis preparedness operates a structured network within the Group. Assigned members perform tasks and implement programs to ensure the readiness of their business units and functions. These programs include crisis simulations, media training for potential spokespersons, maintenance of key databases, and analysis of relevant internal and external events. The risks identified through the Enterprise Risk Management approach influence the scenarios used in the simulations.