Risk management

VVO's risk management is based on the company's risk management and treasury policy, corporate governance and ethical guidelines, and the risk assessments carried out in connection with the strategic and annual planning process. Risk assessments identify the most significant risks and define means to manage them.

The most notable risks associated with customer management relate to a potential drop in the financial occupancy rate, an increase in resident turnover, and an increase in rent receivables. Factors affecting these risks include economic fluctuations and shifts in demand, both nationally and locally. The financial occupancy rate of rental apartments, resident turnover, the number of applicants, and the amount of rent receivables and changes thereto are monitored by region on a monthly basis.

VVO is developing its rental housing operations and property renovation activities, and strengthening its customer relations. These measures seek to maintain a high occupancy rate and decrease resident turnover.

Ensuring that the value of VVO’s housing stock continues to rise requires investments in growth centres and systematic renovations across all apartments and properties. Potential changes in apartment prices can affect the fair value of VVO's property assets.

The financial risks relating to VVO Group’s business operations are managed in accordance with the treasury policy confirmed by VVO-group plc's Board of Directors. The treasury policy defines objectives for funding, division of responsibilities, operating principles, financial risk management principles as well as monitoring and reporting principles. VVO Group’s financing aims at ensuring the availability of financing and maintaining liquidity cost-effectively at all times, and at managing funding and credit risks.

Financial risks caused by uncertainty concerning the money market relate to increasing interest margins and rising interest rates, and affect the availability of finance.

Major fluctuations in interest rates and margins may have a significant impact on VVO's financial performance, and could prevent investments in new construction and renovations. Interest rate risks are managed by dividing loans between fixed and floating rate loans, and by different interest rate renewal periods. The interest rate risk associated with market-based loans is also managed using interest rate derivatives. The interest rate of state-subsidised loans is tied to the Finnish consumer price index, which may cause considerable fluctuations in annual interest costs. Some loans have an interest rate ceiling that reduces the interest rate risk resulting from inflation.

The Group seeks to ensure the availability of financing by diversifying the financing sources and instruments in its loan portfolio and spreading the maturity of its loans.

The most notable risks associated with properties are liability risks, such as water damage and fire. Liability risks are managed with appropriate preventive safety measures and by insuring properties against damage. VVO Group regularly reviews its insurance policies as part of overall risk management. The main insurance policies are property, liability, loss of profits, accident, travel, and vehicle insurance.