Risk review

factory workers

Hydro has developed and implemented an enterprise risk management model, approved by the Board of Directors. In accordance with this model, risk factors that are relevant for our business are continuously identified, analyzed, addressed and monitored. Risk management is an integral part of Hydro’s business activities, and the business areas consequently have the main responsibility for managing risks arising from their business activities. Hydro’s corporate staffs establish and develop policies and procedures for managing risk, and coordinate a semi-annual overall enterprise risk assessment. Major risks are followed up, on an ongoing basis, as part of our internal performance review structure.

Risk management in Hydro is based on the principle that risk evaluation and mitigation is an integral part of all business activities. A core strategy to reduce the risks related to weak economic and unfavorable market developments is the continual improvement of our competitive and cost position as well as maintaining a solid financial position and strong credit worthiness. Hydro's integrated value chain plays a key role in mitigating risk as the earnings volatility in upstream aluminium is typically higher, whereas downstream and Energy businesses generate more stable earnings over time.

Commodity price sensitivity +10%
NOK Million EBIT
Hydro Group  
Aluminium 3,000


Currency sensitivities + 10%Footnote 1
Sustainable effect      
EBIT 2,840  (1,080)  (240)
One-off reevaluation effect      
Financial items (250) 440 (2,040)

Footnote 1Annual sensitivities based on normal annual business volumes. LME USD 1 650 per mt, Oil USD 360 per mt, petroleum coke USD 240 per mt, casutic soda USD 380 per mt, coal USD 85 per mt, USDNOK 8.30, BRLNOK 2.50, EURNOK 9.00


Updated: January 25, 2017