Risk management and Internal Control

Risk management procedures aim to help decision makers make informed choices, prioritize actions and distinguish among alternative courses of action.

Uncertainty is everywhere in business. The effect of this uncertainty on the Group’s objectives must be assessed continually and the most significant risks must be treated.

Risk management is part of the responsibilities of the board of directors, management teams and an integral part of processes like strategic planning, employee development programs and all project and change management processes.

To reduce risk in general, Visma remains divided into several legal entities in the countries in which it operates. Each entity produces detailed monthly reporting and holds monthly Board meetings. Reports are submitted early on the fifth working day of the month. The division into many legal entities reduces the contractual risks. Most of Visma’s contracts are relatively small and hence the contractual risk is limited. Nevertheless, Visma is also involved in a few very large projects. For these, formal steering committees are established, and both divisional and top management of Visma participates in these committees.

Visma seeks to limit malpractice through thorough recruitment processes as well as through training, quality systems and its Code of Conduct. Even with such measures, professional malpractice may occur and Visma has liability insurance in place to cover such incidents.

As a leveraged company Visma has debt service obligations and depends on a steady cash flow. Since the company has very limited COGS, it hardly carries any inventory. Visma has strict principles for income recognition, and the main cash flow risk is related with EBITDA performance. As long as Visma has sufficient EBITDA, the risk of a shortfall in the cash flow is limited. Visma manages its cash through a multi currency-, real-time cash management system. This system is managed by the CFO of Visma, and makes it possible to monitor and control large cash flow movements.

Like most companies, Visma is exposed to general market conditions and developments in GDP in its key markets. In addition, Visma is a technology company and, as such, exposed to risks associated with rapid changes in technology and strong competition. The competition can be divided into two categories, large international companies and smaller local players. It is a constant struggle to protect and gain market share and all units of Visma have numerous local specialised competitors, but while some of these may be aggressive in certain areas, their potential impact on the Visma Group as a whole is limited.

Profitable growth and cash flow generation are the utmost objectives of the Visma Group and its owners. To be able to achieve these objectives we depend on motivated employees and satisfied customers that continually come back and buy more products and services. We also depend on confident owners who are willing to take financial risks and continually support the business development.

Most of Visma’s business is certified according to ISO9001, ISO20000 or ISO27001. While such certification does not remove contractual risks, it provides a formal framework for managing and limiting risks.