ERM & Materiality

Enterprise risk management

A global approach

Bekaert’s Enterprise Risk Management (ERM) approach is integrated within the company’s strategy and the resulting decisions and activities that drive its implementation. 
This permanent ERM framework, endorsed by Bekaert’s Board of Directors, helps managing uncertainty in Bekaert’s value creation model. It also contributes to achieving the company’s objectives, both financial and non-financial, and complying with laws and regulations as well as with the Bekaert Code of Conduct.
The framework consists of the identification, assessment and prioritization of the major risks facing Bekaert. It also encompasses continuous reporting and monitoring of these major risks as well as developing and implementing risk mitigation actions.
The risks are clustered in seven risk categories: strategic, people/organization, operational, legal/compliance, financial, corporate and geopolitical/country risks. The identified risks are classified on two axes: probability of occurrence and impact or consequence. The risk evolution is evaluated on a quarterly base. 

The main changes in 2021

Exposure to cyber security risks (increased risk)

Many operational activities of Bekaert depend on IT-systems that are developed and maintained by internal and external experts. Home office work has expanded the number of end-point devices and connection channels. A cyber-attack affecting critical IT systems could interrupt Bekaert’s business continuity and affect profitability. To mitigate these risks, Bekaert organized an Information Security week in October 2021. 1 200 participants learned about cyber-smart working models, tools, and controls and all managers and office employees succeeded in a mandatory test at the end of the week. Bekaert also continuously invests in the protection of its digital systems and channels, as well as in fast recovery solutions should the risk of a cyber attack occur.

Return on investments (decreased risk)

Bekaert’s strategy focuses on value generating growth. The Group considers both organic and inorganic growth in existing markets and beyond. A potential delay in generating the intended return on investment might postpone the delivery on this strategic priority. To mitigate this risk, a structured capital allocation framework has been put in place that determines the capabilities and criteria to identify, analyze, approve, and integrate the organic and inorganic growth plans.

License to operate (increased risk)

Governmental and societal commitments to mitigate the impact of climate change are increasingly driving the strategic role and responsibility of industrial companies. Laws and regulations can present operational challenges, higher costs and a potentially uneven competitive environment. When laws and regulations cannot be met within a set timeframe, the risk of losing a license to operate might occur. Underperformance on sustainability targets can also cause reputational damage and affect Bekaert’s position as a preferred partner to customers and investors. Bekaert has established a new sustainability strategy that will step up our sustainability performance. Our environmental targets, which are aligned with the Science-Based Targets initiative, are ambitious and will be implemented according to a roadmap that has been approved by the Board of Directors.

More information on our financial and non-financial targets and performance is included in ‘Our performance in 2021’ in this chapter. 
More details on Control and ERM and the respective Governance bodies are included in part II: Governance Statements.

Note: this 2021 ERM report, risk evaluation and risk matrix do not include the increased risks that are arising post-balance sheet date as a result of the situation in Ukraine. 
Those increased risks include a potential impact on demand changes, supply chain disruptions, credit risks and other. 
Bekaert has put a task force in place to monitor the situation on a daily basis in order to assess and mitigate the potential impact on the company.                    

Materiality matrix

Both the ERM framework and the materiality analysis are considered strategic tools to identify and prioritize the actions that are crucial in driving value creation and in addressing the challenges and mitigating the risks.

Where the ERM Model classifies risks according to probability of occurrence and the impact or consequence for our business, the Materiality Matrix positions the levers of value creation for our business in relation to the importance our stakeholders attach to them.

Our approach ensures that the main risks of the Group are linked to materiality topics. GRI 102-47, GRI 103-1

Materiality matrix
ERM model

More information on ERM is included in Part II: Governance Statements of this report.

Bekaert uses Global Reporting Initiative (GRI) as an external reference for the materiality analysis. More information is included in Part III: GRI content index and materiality of this report.

Icon representing download Download full pdf Icon representing download Download Strategy and performance icon globe Download iXBRL report