Investor Presentaiton
Novo Nordisk Annual Report 2023
Risk management
Introducing Novo Nordisk Strategic Aspirations
Risks
Management
Consolidated statements
Additional information
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To be a sustainable business, we must remain responsive
to evolving expectations and seize strategic opportunities
as they arise. Managing risks rigorously and systematically
is crucial to our ability to create and protect value.
We apply a dual-lensed approach to risk management. This means we
identify and mitigate both operational risks that pose a threat to our
short- to medium-term plans, as well as strategic risks that could reduce
our ability to achieve our corporate strategy over the long term.
Addressing risks in our strategic planning
Scenario and risk-thinking exercises are part of our strategic planning.
They include analyses of market dynamics, as well as impacts from
socioeconomic, environmental, geopolitical and political developments
that present risks or opportunities for our business. Annually, Executive
Management and the Board of Directors review a strategic risk profile.
The main strategic risks are:
Innovation and competition
Novo Nordisk faces a concentration risk with multiple brands being
dependent on the semaglutide compound as the active pharmaceutical
ingredient. To remain competitive in the long term and thereby mitigate
the innovation risk, we invest in internal and external pipeline opportunities
to ensure patients receive improved treatments.
Production capacity and supply chain risks
Demand fluctuations, resource shortages, geopolitical instability, trade
disputes and local manufacturing requirements are all factors that can
pressure global supply chains. Furthermore, expanding production
capacity is complex and associated with a long lead time. Therefore,
planning and management of our production capacity and supply chain
are key to mitigate this risk.
Access and affordability
Access to affordable care is a global issue as healthcare systems struggle
to provide quality care at a sustainable cost, while the burden of chronic
diseases keeps rising. Ensuring access and affordability is a risk and
responsibility Novo Nordisk shares with all involved in healthcare. We
recognise that we cannot defeat chronic diseases alone, but to mitigate
the risk we can accelerate our actions to find solutions in collaboration
with relevant stakeholders.
Digital disruption
New digital technologies could bring new competitors into the
pharmaceutical industry. They also provide an opportunity for us to
deliver more value to our stakeholders and help patients live a life with
fewer limitations. Digital health solutions bring new risks, particularly
regarding data regulation and privacy, as well as potential quality issues.
We strive to monitor and mitigate these risks in close collaboration with
relevant partners.
Environmental impact
Novo Nordisk has an impact on the environment and changes to the
climate could potentially have an impact on Novo Nordisk's business.
As part of our 'zero environmental impact', we assess, monitor and
mitigate these risks throughout our value chain.
Ethics and compliance
Our commitment to ethics and compliance remains at the forefront of all
our operations. Any inability to uphold our ethical standards could lead to
reputational implications, with potential effects on market access and
pricing negotiations. Our values, encapsulated in the Novo Nordisk Way,
guide every decision we make. OneCode, our code of conduct, further
empowers us to conduct our operations responsibly. These guidelines help
us to maintain integrity, thereby enabling us to fulfil our purpose effectively.
Operational risk management process
In the short- to medium-term, we are exposed to risks throughout our
value chain. Some risks are inherent in the pharmaceutical industry,
such as delays or failures of potential late-stage medicines in the R&D
pipeline. Other risks, such as geopolitical instability, supply disruptions
and competitive threats, are familiar to any manufacturing company
with global production. We will not compromise on product quality,
patient safety and business ethics: these are front and centre of our
enterprise-wide risk management set-up. We assess risks as potential
financial loss or reputational damage likelihood.
Executive Management, the Board of Directors and the Audit Committee
review a risk grid of our biggest operational risks every six months. This
grid is based on insights from management teams across the organisation
and includes all types of risks that could cause significant disruptions to the
business over a three-year horizon, including potential ESG risks. An overview
of our key operational risks, along with detailed descriptions, is provided on
the next page. For more information, see our Corporate Governance Report
available at: www.novonordisk.com/about/corporate-governance.html.
Company reputation
On the following page we also include the Novo Nordisk reputation score.
This is measured among key stakeholders (i.e. the informed general
public, people with diabetes, people with obesity, general practitioners
and diabetes specialists) and is an indicator of the extent to which we live
up to society's expectations.View entire presentation