Efore has specified the most significant risks and their management from the point of view of the entire Group. According to the Board of Directors' estimate, the most significant risks are associated with the dependence on the key customers, delays in development projects of new products and materials management. Short term risks are described in Interim Reports.
Dependence on certain main customers
Challenges to the demand for Efore products have been caused by dependence on certain main customers. Strong dependency on the telecom customers' demand in the customized products business model can cause delivery reductions if the demand is weak. It is difficult for Efore to rapidly adjust its operations to this fluctuation because products can not be sold to another customers. Efore aims to widen its customer base and decrease its dependence on certain customers according to the strategy by developing new accounts and by increasing the share of standard products and industrial sector. Dependence on main customers is approx. 40 %.
Risks associated to Product Development projects
If Efore's Product Development is delayed in its projects for new products or that products are unable to meet customer requirements in terms of a product’s performance or quality may have an impact on profitability of the company.
The aim of the risk management is to prevent risks by developing Product Development processes, customer intimacy and by improving the skills of personnel. The company is dependent on the success of its product development projects.
Material and component costs are the largest items in the company's cost structure and therefore efficient order and supply chain management is important for the profitability of the company's business operations. Material risk consists of a delivery time and technical features of the components. Delivery times of certain components are so long that the Company can loose the deal because the customer wants to have shorter delivery times. Components can also be technically defective and all components can not be tested before using them in manufacturing process. Efore manages risks associated to material costs and availability by using sophisticated information systems, supply chain management and through appropriate agreements with component suppliers and customers.