ORGANISATION AND MANAGEMENT
Organisation
The main bodies in KONGSBERG's management model are the general meeting, the Board, the CEO and corporate management. The Group has two business areas (BAs) which have their own sales, growth, improvement and performance goals. The Group's organisational model attaches importance to clear accountability for results, so authority is to a large extent delegated. The main corporate functions include drawing up policies and principles that apply to the entire Group, having subject-specific responsibility in selected areas, providing technical advice to the BAs, and providing services in fields in which coordination generates profits.
Strategy
The Board bears the ultimate responsibility for the Group's strategy. Corporate management draws up proposals for strategies and long-term, paramount objectives. The strategy and the objectives are discussed and adopted by the Board. This is an annual process that has a rolling five-year perspective. The process normally starts in January/February and ends in June. Contributions to the strategic planning process come from different parts of the organisation. Based on the strategic planning document and the long-term objectives, operational goals and plans are drawn up for all profit centres.
Budgets
The budget process usually starts in mid-September. All profit centres take part in these efforts. Budgetary guidelines are drawn up at the corporate level, based on the strategy document and relevant external framework conditions. It is important to improve on past performance. The budget is subject to in-depth treatment by corporate management and the Board. The final budget is adopted by the Board in December, and then used as a tool for short-term financial management for the next calendar year. The budget applies throughout the budget period, and has a binding effect on the managers of the individual units.
Risk reporting to the Board
Comprehensive risk analyses are compiled for the Board on a quarterly basis. The analyses mainly cover operational risk, business risk, legal risk and financial risk. It has been decided that reputation risk will be included in the analyses as from 2008. KONGSBERG's operational risk is largely related to the implementation of projects of great technical complexity, where product quality is decisive. Business risk is related to market conditions, competitors and other general conditions
prevailing in the markets in which we operate. Legal risk is linked to ongoing disputes that are already in the legal system and to projects that involve differences of opinion with customer/partners. Financial risk is mainly related to foreign exchange and interest rate fluctuations and funding.
In addition, the Board receives a separate HSE report each quarter.
Follow up
Corporate management conducts monthly follow-up meetings with the Group's BAs. These meetings address the follow up of objectives, large-scale projects and risk analyses, as well as of other factors that deserve attention, in addition to financial and market status. The meetings comment on departures from budgets, previous years, planned activities and the outlook for the current year. Corrections are implemented where so required.
Internal control
The Group has no special unit for internal control. Accounting controls are handled through different divisions of responsibilities, guidelines and approval routines. The Group's central accounting service bears overall responsibility for establishing and following up guidelines and principles. The International Financial Reporting Standard (IFRS) and the new Bookkeeping Act have raised the requirements for accounting-related follow-up and control. As a result, the Group's accounting expertise has been fortified. In addition, the Board has appointed a separate Audit Committee.
Intra-Group financial transactions are subject to special control systems and routines. Financial risk is reduced using appropriate financial instruments. Financial risk management is handled by the Group's central financial service.
Responsibility for the commercial content of contracts and agreements rests with the individual business areas.
Follow-up and control relative to the Group's value platform, Code of Ethics and corporate social responsibility policy take place out in the line as part of routine operations. The Group has a special Ethics Council that addresses topics related to the corporate Code of Ethics.
