Risk Management
The Risk Management Framework to Address and Assess Risks
Lundbeck’s risk management processes ensure close monitoring, systematic risk assessment, and the ability to identify, manage and report internal and external risks in a changing environment.
Risk management Governance Structure
Lundbeck is exposed to risks throughout the value chain, from the initial stages of developing innovative pharmaceuticals in our in-house facilities to the proven pharmaceuticals reaching the patients.
Lundbeck’s risk management processes are continually updated and adapted to match internal and external requirements, where risks related to trends, global economic developments, geopolitics, and long-term forecasts are assessed as part of Lundbeck’s long-term strategic planning. With this understanding of the wider context and an accurate and complete overview of Lundbeck’s activities and resources, Executive Management has a clear basis for decision-making on our overall risk exposure and mitigating actions.
The Board of Directors has the overall responsibility for ensuring that Lundbeck has implemented necessary procedures for risk management.
The oversight of compliance within the established enterprise risk management framework is delegated to the Audit Committee.
Risk Management Framework
In Lundbeck, enterprise risk management is considered an integral part of doing business, which is reflected in the risk management process.
The process starts in the decentralized teams within each Executive Management area. The teams have detailed and extensive knowledge of the risks within their areas of responsibility. They systematically identify, quantify, respond to and monitor risks. They are ideally placed to mitigate our risk exposure in the first instance.
Each area shares the risks with the central Risk Office when there are material updates, and at least on a semi-annual basis. The central Risk Office provides the risk framework and conducts interviews with management, risk contributors, and risk responsible individuals.
This represents an integral part in the alignment of risks reported to the Risk Office.
In cooperation with each Executive Management area, the Risk Office assesses the likelihood of an event occurring and the potential impact on the Group in terms of financial loss. The key risk overview is presented to Executive Management for their assessment and approval before it is reported to the Audit Committee and approved by the Board of Directors.
The corporate risk register kept by the Risk Office provides a consolidated overview of Lundbeck’s risk exposure by detailing each risk, risk category, and type. The risk descriptions provide details on the event, its current status, the status of the response, and the likelihood and potential impact.
Our reporting process defines six risk categories:
- Research and Development
- Market, Commercial, and Strategy
- Supply, Quality, and Product Safety
- IT security
- Legal and Compliance
- Finance
Lundbeck has developed a concise process covering day-to-day risk identification, monitoring, mitigation, and reporting within each Executive Management area, all the way to the final reporting to Executive Management. This process enables Executive Management to control Lundbeck’s risk appetite when deciding strategy and practice, and when making day-today decisions
Key Risks
| Risk Area | Description | Potential Consequences | Mitigating Actions |
|---|---|---|---|
| Research and Development | Exposure to delays of regulatory approval or failure in the development of new and innovative medicines.
Increased regulatory requirements for clinical trials.
Data requirements from production of nonclinical and clinical studies. |
Delays or failure of new products could impact patients who cannot benefit from these products and decrease earnings expectations for Lundbeck and its shareholders.
Delay in regulatory approval may impact the patient’s drug access.
Issues with data integrity could lead to delays in studies and production – ultimately leading to withdrawals and failure to gain approval. |
Clinical trials are run and evaluated throughout the research and development phase.
Ongoing evaluation of the product pipeline, regulatory requirements, and product benefit.
Robust quality management system is in place to ensure consistent quality, data integrity, and the compliance of clinical trials and clinical safety activities |
| Market , Commercial and Strategy | Price pressure, new legislation, regulation of reimbursement and healthcare reforms in key markets, etc.
|
Market restrictions could impact patients’ access to Lundbeck products.
|
Understanding the price development in main markets.
|
| Supply, Quality and Product Safety | Disruption of production or supply or unpredictable demand and stock-out.
|
Product shortage, not giving patients needed access to the pharmaceuticals they require. |
Systems, policies, and procedures are in place to ensure product supply, quality, and safety.
|
| IT Security | Cyber attacks and cyber fraud.
|
Disruption or compromise of IT security could affect all parts of Lundbeck’s operations and product supply to patients.
|
IT policies and procedures are in place to safeguard systems and data.
|
| Legal and Compliance | Loss, expiration or infringement of intellectual property rights.
|
Loss, expiration, infringement, or invalidation of intellectual property rights could decrease earnings for Lundbeck and its shareholders.
|
Policies and processes are in place to safeguard intellectual property rights.
|
| Financial | Fluctuations in exchange rates incl. impact from currency devaluations. |
Lundbeck’s cash flow and earnings could be impacted in cases of fluctuations in key currencies. |
Treasury policy.
|
More from lundbeck
Reports and Presentations
A full download center for all of our reports and presentations including annual reports, roadshows, transcripts, and investor webcasts
Financials
Lundbeck's health in numbers
Sustainability
Lundbeck remains committed to sustainability through our strong strategy.