Enterprise Risk Management


Yara is committed to proactive and effective risk management to mitigate adverse effects on our operations and to identify and explore business opportunities. Ultimately, effective risk management contributes to achieving our long-term strategic targets and short-term goals.

Yara’s global risk management process aims to identify, assess and manage risk factors that could affect the performance of any parts of the company’s operation. To this end, we have implemented a continuous and systematic process to mitigate potential damages and losses, and to capitalize on business opportunities.

Risk appetite

Risk appetite is broadly defined as the level of risk an entity deems acceptable in the pursuit of overall goals. Yara’s Board of Directors is responsible for defining Yara’s risk appetite. The Board of Directors and Executive Management have jointly evaluated and defined risk appetite across key operational and strategic dimensions, arriving at a set of practical guidance statements on key risks. These risk appetite statements set boundaries for strategic initiatives, guide resource allocation and aid decision-making within the company. Risk appetite is an integral part of policies and procedures, annual business planning, periodic performance reviews, and capital value processes. Furthermore, risk appetite conveys the way we approach and evaluate risk to our investors, customers, and society at large.

Risk appetite areas

Risk appetite
level

Exposure to global nitrogen price dynamics

We optimize our business model by seeking exposure to fertilizer market prices for own produced products.

High

Exposure to natural gas price markets

Securing access to, and stable supply of, favorably priced natural gas is imperative to our operations and competitiveness. In regions with efficient gas markets, we will seek exposure to spot market prices unless exceptional market circumstances clearly give reason for deviation. In regions without efficient gas markets, Yara seeks to enter into longer term contracts if favorable gas prices are obtainable.

High

JV ownership structure exposure – new entries

Yara has a moderate risk appetite for entering into new JVs. To reduce risks, Yara has a preference for having at minimum an equal representation with JV partners in the Board and will only engage in JVs provided that agreements are commercially attractive, secure acceptable governance standards, policies and procedures, and financial control for Yara. Yara will only enter into JVs where we are confident that we can bring Ethical compliance and HESQ standards to an acceptable level.

Moderate

Culture, people, and leadership exposure

Yara has a low appetite for risk exposures impacting our culture, people and leadership which are crucial enablers for execution of the corporate transformation strategy, and at the same time running current core operations ethically and compliantly. Yara has an ambitious people strategy supporting the shift towards a more entrepreneur- ial culture, continuous improvement, and a growth mindset.

Low

Exposure to new business areas outside current core operation

Yara invests funds in new business areas to mitigate risk in core business and develop new revenue streams. Yara is willing to be exposed to uncertainty around future revenue generation, but the annual resources employed are reviewed on an annual basis.

High

Long term credit rating down grade exposure

We believe a solid financial base is the foundation for the pursuit of sound growth opportunities and have a low risk appetite for financial exposure not derived from the underlying business. We have a low risk appetite for a credit rating downgrade to below investment grade BBB/Baa2. We accept the underlying US dollar exposure embedded in the Yara business model but keep a major part of the company’s debt in US dollar as a partial hedge.

Low

Exposure to non-USD currencies

Yara has a low to moderate risk appetite for short term economic currency exposure and FX losses arising from large and unexpected currency movements. Due to Yara’s geographic profile long term currency risk is embedded in Yara’s business model, mainly through local costs. Financial positions and FX instruments should not increase such exposure but are instead used to actively reduce sensitivity to currencies. Yara has low risk appetite for exposure related to financial risk not derived from the under- lying business.

Low

Tax exposure

Within the framework of tax laws and regulations, we optimize our tax cost in the same way we do other costs. Yara does not pursue tax solutions without existence of commercial purpose and is committed to a transparent management of tax.

Moderate

Information and cyber security exposure

Yara has a low appetite for risk exposure to cyber incidents in the office and production environment. Yara has implemented high level of protection to mitigate exposure to safety and reliability issues in our production sites, in addition to leakage of confidential data, legal and regulatory compliance violations, insider threat from dismissed employees or contractors and loss or malicious modification of business-critical data.

Low

Production reliability exposure

Yara has a low risk appetite for unplanned production downtime for the priority plants and aims to produce optimally at all times balancing investments to improve regularity, process safety, and plant profitability.

Low

Raw material sourcing exposure

Securing supply of key raw materials for our fertilizer production, blending and distribution is crucial for our production plants. The demand for raw materials is covered by our own production as well as sourcing from third parties. Yara has low risk appetite and seeks opportunities to diversify external supply options.

Low

Bribery, corruption, and competition law exposure

We are committed to upholding high standards for human rights, ethical and lawful conduct across the organization in relation to business partners, investors, regulatory authorities and society at large. We have zero tolerance for bribery, corruption and violation of competition law.

Low

Environmental exposure from operations or products

Yara strives to be best in class compared to industry peers and is committed to exploring and promoting the highest standards of environmental responsibility and has a low risk appetite to incidents that can cause damage to the environment as a result of our operations or products.

Low

Health, safety, and security exposure

Securing safe and healthy working conditions is our highest priority. We aim to minimize the exposure to conditions that could negatively affect health, security and safety. Furthermore, we aim to minimize the probability and consequences of process safety and product safety accidents negatively affecting people, environment, assets and the reputation of Yara.

Low

Product portfolio exposure to regulatory changes

Yara has a low appetite for exposure to incompliance to regulatory requirements impacting the product portfolio in our value chain, and proactively seeks to reduce expo- sure to operational, commercial and financial consequences. Yara will proactively liaise with regulatory bodies in order to adapt and adhere to stricter regulations.

Low

 

Risk factors and risk responses -
People, Planet and Prosperity

People risks

The success of Yara’s business and transformation is dependent on our people. Our people processes, -practices, and -frameworks are built on the foundation of our four values. We put substantial resources and efforts into minimizing potential risks with a negative impact on our people, at the same time as we invest to develop our culture, leadership and our organization. Systematic risk management processes are embedded in key business processes to detect potential internal and external risk exposures, and to understand their causes in order to initiate effective risk mitigating responses.

Planet risks

We commit to excellence in our HESQ performance, which is imperative to protect our employees and contractors, and uphold reliability and performance. We have adopted a systematic approach to monitoring and reviewing the quality and handling of all our products, ensuring that proper care is taken throughout the entire value chain.

Prosperity risks

Yara’s business is closely interlinked with the major global challenges of resource scarcity, food insecurity and global warming. Execution of our strategy for sustainable, profitable growth depends on our ability to manage strategically important risks and opportunities relevant to our industry. Yara is further exposed to various financial risks due to our global operations. Yara has implemented, and is constantly developing, comprehensive policies, procedures and tools to manage these risks. In some cases, Yara may utilize derivative instruments, such as forward contracts, options and swaps, to reduce financial risk exposures.

Risk category

Risk factor

People risks

Human capital

 

Health and safety

 

Physical security

 

Personnel security

 

Employee misconduct

 

Human rights

Planet risks

Climate

 

Natural disasters

 

Regulatory framework for production, handling and application of our products

Prosperity risks

Market dynamics – nitrogen commodity fertilizer prices

 

Market dynamics – natural gas prices

 

Raw materials availability

 

Investments and integration

 

Political exposure

 

Information and cyber security

 

Corruption risk

 

Production reliability

 

Supply chain disruptions

 

Financing risk

 

Credit risk

 

Currency risk

 

Interest rate risk

For details about Yara’s response to each individual risk, please see page 119-124 in the Integrated report for 2021.

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Yara manager talking to Yara employees

We are highly committed to  to protecting our people and the environment, while ensuring safe and high quality products. We take responsibility of our processes, and never compromise on safety. 

Read more about our health and safety work