Risk management

Vision and governance

Doing business involves taking risks. We strive to be a successful and respected company and seek to take a balanced risk approach. Risk management is an essential element of our corporate governance and strategy development. We continuously strive to foster a high awareness of business risks and internal control to provide transparency in our processes and operations.

AkzoNobel complies with the risk management requirements of the Dutch Corporate Governance Code 2016. The Board of Management and Executive Committee are responsible for managing the risks associated with our strategic objectives and the establishment and adequate functioning of appropriate risk management and control systems (see Statement of the Board of Management).

Risk management framework

Our risk management framework is in line with the Enterprise Risk Management – Integrated Framework of COSO and the Dutch Corporate Governance Code. It is an embedded, company-wide activity, focused on the areas of main risk exposure and provides reasonable assurance that our business objectives can be achieved and our obligations to customers, shareholders, employees and society can be met. The process consists of risk appetite setting by the Executive Committee to serve as input for our strategy and general risk management approach, followed by structured risk assessments applying a top-down and bottom-up approach, and the management and monitoring of identified risks. The risk management framework is discussed twice a year with the Supervisory Board.


For more information on our risk management framework, visit the Risk management section on our website.

Risk management in 2022

AkzoNobel’s risk appetite differs depending on the type of risk, ranging from a “risk averse” to a “risk-taking” approach. We believe we must operate within the dynamics of the paints and coatings industry and take the risks needed to ensure our relevance in the market. At the same time, topics related to our core values and company purpose require a different risk appetite.


Risk-taking preferences 2022

During 2022, we held a significant number of enterprise risk workshops across the organization, as well as one workshop focused on fraud risk. Risks were identified by responsible management teams and functional experts, followed by the definition of adequate mitigating actions. We consider risk assessment and mitigation to be a continuous process, carried out against the background of an evolving risk landscape, which includes short, medium and longer term challenges.

The symbols alongside the risk descriptions opposite represent management’s assessment of risk development, compared with 2021.

For information related to financial risk management, see Note 27 of the Consolidated financial statements.

For (longer term) risks related to climate change, refer to the Sustain-ability statements.

Symbols indicate the following:

Risk assessed to increase.
Risk assessed to remain fairly stable.
Risk assessed to decrease.

External – Strategic


The risk of significant business disruption and/or inadequate recovery following a cybersecurity attack, leading to potential loss of sensitive information, intellectual property, hard cash or reputational damage.

Mitigating actions

  • Continually reinforcing a cybersecurity culture (intensified training, awareness creation)
  • Renewing and upgrading legacy systems and increasing security
  • Increasing collaboration with suppliers on various detection and response activities and measures
  • Introduction of the updated Information and Cybersecurity Policies framework
  • Introduction of new detection and automatic response security solutions
  • Definition of short-term operational technology cybersecurity governance established in our factories
  • Site factory segregation: measures for improving the network segregation of our factories
  • Establishment of a new Security function within the company

Macro-economic crisis

The risk of a prolonged macroeconomic downturn, leading to local currency devaluation, high inflation, customer de-stocking and a reduction in volume and margin.

Mitigating actions

  • Balanced geographic presence with revenue generated from all regions and continued investment focus on higher growth markets to optimize geographic spread
  • Continued focus on operational cost, complexity reduction and margin management, and deployment of commercial and procurement excellence programs
  • Continue to drive BU strategic mandates underpinning the company strategy

External – Operational

Integrated Business Planning maturity

The risk that we do not reach the required service levels due to inadequate end-to-end planning processes and supply chain infrastructure (forecasting, manufacturing capability, logistic network, IBP process, footprint changes, technology product transfer), leading to loss of existing business and inability to win new business.

Mitigating actions

  • Increase agility and velocity in the end-to-end process through simplification, cross-company initiatives, digitization and datadriven modeling
  • Roll-out of complexity reduction programs and improving efficiency of the product portfolio and supply chain process

Internal – Strategic

Supply shortages

The risk of supply shortages of key raw materials, packaging and/or spare parts, resulting in production interruptions, additional cost and muted organic growth.

Mitigating actions

  • Maintain and further improve strong industry and market intelligence analysis of suppliers and raw material markets
  • Drive supply chain network design, end-to-end from supplier to end customer
  • Assess climate change impact and develop mitigation plans for own operations, key suppliers’ locations and logistics (see the Sustainability statements)

Internal – Operational

Attract, retain and develop talent

The risk that we are unable to attract, retain or develop talent (in an overheated labor market) to ensure a fit for future workforce with the right capabilities, resulting in a threat to the organization’s competitive advantage and ability to achieve our strategic objectives.

Mitigating actions

  • Strengthen AkzoNobel’s value proposition, based on our commitment to employee growth and the company’s purpose
  • Focus on talent acquisition, talent development, talent retention and succession planning in several ongoing programs
  • Continuation of employee well-being programs and embedding the Talent Management Framework to drive talent and leadership development

Geo-political instability

The risk that increasing geo-political turbulence results in declining customer and industry confidence, as well as a decline in key markets and significant losses to our sales and profitability.

Mitigating actions

  • Balanced geographic presence with revenue generated from all regions and continued investment focus on higher growth markets to optimize geographic spread
  • Geo-political assessment as part of investment decisions and medium-term operational planning (e.g. taskforce for Russia/Ukraine war)
  • Continue to drive BU strategic mandates underpinning the company strategy
  • Driving demand planning through Integrated Business Planning

Pricing and margin management

The risk of lower margins resulting from higher raw material prices and inflation (including freight and energy) and increased competitive pressure, combined with insufficient margin management.

Mitigating actions

  • Continue to drive BU strategic mandates underpinning the company strategy and increase collaboration between BUs to enable agility
  • Investment in sales capability and deployment of commercial excellence programs
  • Continuation of close monitoring of raw material prices and availability

Ability to execute

The risk of misalignment between the business and functions and short term versus long term, leading to inability to support and drive the business agenda and growth plans, resulting in not delivering on our strategy.

Mitigating actions

  • Global process organization in place to increase common competencies and align on key end-to-end process improvements, as well as increased collaboration between relevant functions in IBP
  • Changing the leadership team: flattening the organization, increasing business representation in the Executive Committee and consolidation of Commercial and Strategic functions

Business continuity

The risk of being unable to respond adequately to a significant business interruption (e.g. system outage, fire, shipping issues, supply disruption) leading to financial and reputational damage.

Mitigating actions

  • Continue to enhance our business continuity processes and plans, supported by taking Integrated Business Planning to a next maturity level and increasing cross-functional and business collaboration

Product portfolio

The risk of lacking a fit for purpose product portfolio, leading to a cost base that’s too high and an inability to compete in the market.

Mitigating actions

  • Continue to reduce the complexity of our product portfolio and further increase integrated decision-making
  • Continue to deploy our sustainable product portfolio management to further develop low carbon and more circular solutions (see the Sustainability statements)