Business risks

The company’s main business functions are pension services, insurance services, client relationship management, and investment operations, including their support functions. Essential risks are related to investments, information technology, the networked operation of the pension system, and to adjusting the control system and operating models to changes in the operating environment and legislation.

Other major risks include costs related to the structure of the earnings-related pension system, risks related to the choice of technology, and the project and implementation stage of new projects, risks related to the management and development of outsourced IT processes, contractual and counterparty risks, as well as risks related to the functioning and financial success of the partnership network.

Varma’s most important operational requirement is to manage all pension and insurance transactions correctly and on time.

Financially the most important risks are those concerning investment operations.

Other risks are those connected with management information, corporate image, functional shortcomings and/or incorrect use of information systems, incorrect handling of information, incorrect interpretation of provisions and regulations, incorrect handling of investments, the company’s physical operating environment, efficient use of resources, disturbance-free operation of the European payment and securities settlement system, and the underwriting business, which is the company’s own responsibility.

The pension system may also be affected by risks connected with its structure and functioning, and the country’s economy. These are discussed in more detail in the section Other risks.

Varma has one head office, one operational area (Finland), a simple group structure, statutory products, a small number of staff relative to its turnover, and a low number of transactions relative to its investment volume. Varma analyses its risks from bottom to top and from top to bottom so that it can ensure that all company risks are comprehensively covered from different perspectives.