FINANCIAL RISK MANAGEMENT
The objective of financial risk management is to protect Nokian Tyres' planned profit development from adverse movements in financial markets. The principles and targets of financial risk management are defined in the Group’s financial policy, which is approved by the Board.
Financing activities and financial risk management are centralized to the parent company Group Treasury, which executes financing and hedging transactions with external counterparties and acts as a primary counterparty to business units in financing activities like funding, foreign exchange transactions and cash management.
The Group Credit Committee makes credit decisions that have a significant impact on the credit exposure of the Group.
Sensitivity analyses presented in connection with financial risks are based on the risk exposures at the balance sheet date. Sensitivities are calculated by assuming a change in one factor affecting the value of a financial instrument, such as interest rate, foreign exchange rate or electricity price, with all other variables held constant. When calculating sensitivities, a 1%-point change in interest rates, a 10 % change in exchange rates and a 5 EUR/MWh change in electricity prices are assumed.
More detailed information about Nokian Tyres' financial risks and risk management is described in the company's Financial Review 2019.