Running a business entails risks and opportunities. Responsible management of both is a core element of BLG LOGISTICS’s solid corporate governance. Our opportunity and risk policy aims to increase the company’s value without taking any unreasonably high risks. To this end, we continually integrate processes and instruments that enable us to identify potential risks at an early stage and make informed decisions in order to mitigate or completely avoid them.
Incorporating sustainability into our risk management is an ongoing process that was continued in 2024. For example, we further developed the methodology of the LkSG risk analysis introduced in 2023 and combined it with the requirements of the CSRD. The analysis serves to identify risks related to human rights and the environment in accordance with the Supply Chain Due Diligence Act (LkSG) in the company’s own operating segments and in the supply chain. In addition, a double materiality analysis according to the CSRD was carried out for the first time. This involved, on the one hand, looking at the potential and actual impacts of our business – both positive and negative – on society and the environment and, on the other hand, assessing the financial risks and opportunities that external sustainability factors have on our business or could have in the future. More details on methodology are provided later in this section. The results will be incorporated into our Group risk management in the medium term.
Perspectives of risk management
Risk and opportunity culture
We pursue profitable growth with sustainability-related objectives in mind. The risk and opportunity culture as an integral part of our corporate culture encompasses the basic attitude and behaviors required when dealing with risks and opportunities. It significantly influences risk awareness when making our business decisions and creates the basis for developing appropriate and effective measures so that we can seize our opportunities safely and responsibly. Our risk and opportunity culture is the basis for our successful risk management. Effective risk management also requires that transparency and a willingness to actively communicate and cooperate are an integral part of this culture and that they are consistently practiced.
Basic elements of risk management
In line with our risk strategy, the elements of the risk management system are implemented centrally to ensure clear responsibilities. These elements are laid down in the Group Policy on risk management and form the basis for systematically and consistently identifying, documenting, analyzing and assessing risks. They also enable effective control, monitoring and communication. Our goal is to promote a common awareness and positive understanding of how to deal with business risks – both at management level and among all employees.
Responsibilities in connection with risk management organization
The overall objective of risk management is to ensure the company’s long-term risk-bearing capacity. Central tasks include identifying and assessing risks early, efficiently managing and monitoring them through appropriate measures, and continuous and transparent reporting as a basis for sound decisions. Through this holistic approach, risk management helps with the implementation of our corporate strategy and makes an important contribution to target achievement.
Objectives of risk management
- Early detection and prevention of crises and insolvencies (safeguarding the business as a going concern)
- Improving planning reliability and risk costs through optimum risk management
- Sound preparation for making business decisions using risk analysis to improve the company’s success
- Achieving sustainability-related corporate objectives and monitoring sustainability-related risks with regard to the three dimensions of ESG (environment, social, governance), taking into account the principle of double materiality
Special attention is paid to “extreme risks”, i.e., those generating a high level of damage with a low probability of occurrence. These include extreme natural disasters, economic crises and terrorist attacks. Our Business Continuity Management (BCM) system also intervenes in the event of resulting business interruptions. Here, strategies, plans and measures are developed to protect activities or processes, or enable alternative action.
Identified risks are addressed and continually monitored through central and local measures. In addition, regular presentations and discussions take place in the management groups and on the Risk Committee. The resulting risk reports were submitted to the Board of Management quarterly and over the reporting year and at each regular meeting of the Supervisory Board in order inform both bodies of the overall risk situation.
Risk categories and risk outlook for BLG LOGISTICS
In Group risk management, particular focus is placed on potential outside-in risks that would have noticeable impacts on the company’s assets and liabilities, changes in financial position and profit or loss if they materialized. These risks are grouped into five defined categories (see graphic below). Risks from the environment, social and governance areas (ESG, outside-in perspective) affect all five categories. Given the broad ESG spectrum, we look not only at risks, but also at opportunities. The related topics can affect many areas – from financing to human resources policy to procurement – and affect the overall risk position.
Influence of ESG topics on corporate risks
Environmental risks
As a seaport and logistics service provider, we are severely affected by environmental and climate-related risks. Dealing with the effects of ongoing climate change is therefore a major challenge for us. The increasing frequency and intensity of acute extreme weather events such as heat waves, storms and floods poses a threat to our assets and business processes, as do long-term chronic changes in mean values and fluctuation ranges of various climate variables – including temperature, precipitation and sea level. In order to address these risks, we have analyzed various scenarios involving damage to our property, plant and equipment due to natural disasters, including any business interruptions that may potentially occur as a result. BLG LOGISTICS has taken out property and business interruption insurances to transfer the risk. However, individual theoretical risks, such as a storm surge, cannot currently be fully insured. Such risks are considered as much as possible as part of our Business Continuity Management (BCM). In addition, climate adaptation strategies need to be developed in the medium term at potentially affected sites.
In order to prevent climate risks from becoming increasingly exacerbated, we are pursuing an active climate protection strategy. In the reporting year, various projects aimed at increasing energy efficiency were successfully implemented. In addition, optimizing route planning for our transport operations helped reduce the environmental impact while also reducing costs. A detailed overview of the measures implemented can be found in the Climate Protection and Energy Management sections.
With our comprehensive measures, we not only want to reduce environmental and climate-related risks, but also ensure that we stay competitive over the long term. By integrating environmental aspects into our risk management and proactively responding to the associated challenges, we position ourselves as a reliable partner for our customers.
Social risks
Our employees are crucial to our success. As such, their well-being and development are at the heart of our efforts.
Demographic change and the changing requirements resulting from ongoing digitalization and automation are leading to a shortage of qualified workers in many areas. Failure to refill positions within the desired time frame or with staff with the required skills will result in lost productivity. At the same time, the burden placed on the workforce is increasing, which can lead to increased absenteeism, accidents and additional staff turnover.
In order to reduce staff turnover, targeted investments are being made in the skills of staff and senior executives. We are also revising our feedback tools to strengthen the exchange between employees and top management. We promote employee retention through targeted personnel development measures, strong leadership and transparent remuneration systems that create trust and satisfaction.
In addition, the HR department was restructured in the reporting year for more effective recruiting. The expertise required for an efficient, targeted application process has now been pooled into one corporate recruiting department. In addition, key positions are identified and comprehensive talent management is put in place in order to secure important competencies within the company and actively address future challenges. These measures ensure that BLG also keeps qualified staff in the long term and is perceived as an attractive employer.
Governance risks
The number of cyber incidents, including IT outages, ransomware attacks or data breaches, continues to be high across the globe for all companies. Since information security is of central importance within our business processes, the associated risks remain highly relevant for BLG LOGISTICS. In order to avoid or minimize them, we have taken numerous measures and are continually reviewing our processes and technology.
Raising awareness among our employees of how to handle business-relevant information responsibly is very important in this context. That is why we conduct internal training and communication campaigns and work to ensure that the confidentiality, integrity and availability of information are maintained through appropriate technical support.
In 2024, as in the previous year, we intensively reviewed and further developed our emergency processes. Among other things, a crisis management group with clearly defined decision-making powers was created to ensure quick, efficient responses using defined procedures in the event of a potential attack.
Together with the Data Protection Officer, we ensure that personal data are processed exclusively pursuant to the provisions of the EU General Data Protection Regulation and in accordance with applicable local laws.
Further development: our inside-out risk management
In recent years, risk management in sustainability management has taken on a more important role through the LkSG and, most recently, the CSRD, among other things. Accordingly, the systematic consideration of the impacts, risks and opportunities within the scope of sustainability management has also gained importance.
Our first double materiality analysis was also conducted to this end. First, the potential and actual impacts, risks and opportunities in our own business segment, as well as along the upstream and downstream value chain were compiled and defined in a comprehensive list. They were then given time horizons for a (potential) occurrence and quantitatively assessed for magnitude and probability of occurrence. In addition, the impacts were assessed with regard to scope and irremediable character, whereby Corporate Risk Management’s assessment logic was applied. The next step is to integrate the sustainability risks and opportunities identified into the Group’s risk management system. Other impacts will continue to be considered at the company level, according to their importance. Further information on the materiality analysis can be found in the Materiality Analysis section.
The risk management system had already been introduced in 2023 in accordance with the LkSG guidelines to systematically record human rights and environmental risks in our own areas of activity and at our direct suppliers. This risk management system was further developed in 2024, using synergy effects for the double materiality analysis according to the CSRD, in particular. The approach to risk analysis differs between our own business segments and our suppliers. Concrete potential risks as well as existing countermeasures are analyzed at our sites. Our suppliers, on the other hand, are initially classified into risk groups on the basis of abstract industry and country risks. Suppliers with a higher potential risk are then subjected to a detailed analysis. A software solution was implemented in the reporting year in order to support both analyses in a targeted manner. In addition to a data-based assessment of our suppliers, it also allows for direct exchange with them, by way of supplier self-assessments, for example.
The Corporate Sustainability Department is responsible for the risk analysis according to the LkSG, whose manager is also the human rights officer for BLG LOGISTICS. Central Purchasing is responsible for conducting the annual risk analysis for supply chains. The results are included in our publicly available Declaration of Principles on Human Rights, which can be found here: www.blg-logistics.com/en/sustainability. Further information on supply chain management and details on the risk analysis process according to the LkSG can be found in the Sustainable Supply Chain section.