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Risk management

Our enterprise risk management is designed to identify and manage uncertainties and risks affecting the Group in the global market place. We seek to identify, prioritise and manage key risks at all levels of the business to support the Group in better decision making, proper allocation of resources and better and faster utilisation of opportunities that arise.

The responsibility for the governance of risks lies with our Board of Directors. On behalf of the Board of Directors, the Audit Committee monitors the effectiveness of our Group's risk management and evaluates the design annually. The Executive Board manages the operational part of our risk management and our Executive Management ensures proper and complete reporting to the Audit Committee.

Scandinavian Tobacco Group operates with a framework including various principles that secure a structured and cross-functional approach to risk management.

The approach is a top-down facilitated process with the intent to identify risks and support risk management throughout the organisation, and ensure consistent follow-up and reporting on risks to the Executive Board during the year. To receive input from the organisation, a Risk Team works with key stakeholders across the business to ensure an effective assessment before presenting recommendations to the Executive Board. The Executive Board performs an annual risk assessment based on the impact and likelihood of a risk materialising. The process ensures that appropriate actions are taken to reduce, prevent or mitigate risks and to ensure that the Group is transparent and compliant in its external communication on these risks.

The main risk categories identified are regulation, excise taxes, total market development, cyber risk and implementation of a new Group Enterprise Resource Planning (ERP) system.

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