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Controlled risk-taking decisive for good profitability

RISK MANAGEMENT – AN INTEGRATED PART OF DECISION-MAKING

Together with the clear focus on long-term approach and sustainable value creation found in JM’s business concept and strategy, risk management helps ensure that risk-taking in the business is kept at a balanced level. Risk management is therefore an integrated part of decision-making at all levels of JM. It is subject to strategic initiatives from the Board and management.

Procedures for project oversight, monitoring and follow-up are designed to reduce business and implementation risks. This applies in particular to the initiatives produced within the framework of Structured Project Development, which help reduce the operational risks in the business. All significant business and project decisions are analyzed with regard to both risk and opportunities.

In 2019, the most important risks within JM, other than the macroeconomic development, were related to the gradual stabilization of the housing market, primarily in Stockholm. Improved sales and reservation levels in current production decreased the risk in the business, which, however, was in balance even during the weaker period in 2018. Housing starts were somewhat limited in 2019 primarily due to drawn-out planning processes and delayed authority decisions.

Going into 2020, the risk of local oversupply of newly produced residential units in Stockholm decreased. This improved the conditions for sales and housing starts for new projects. The planning processes in our main markets continue to be an important condition for the rate of housing starts. However, in 2020, COVID-19 has created uncertainty and risks during a period when JM has been strong given both its business model and its finances. JM’s strategy for bridging the acute COVID-19 period is to safeguard cash flows and production capacity.

Read more about risk management in the Annual Report