Risk management

Kojamo’s risk management is based on the Company’s risk management and treasury policy, corporate governance and Code of Conduct as well as the the risk assessments carried out in connection with the strategy and annual planning process. Risk management is part of the Company’s internal control, its purpose being to ensure that the Company achieves its business objectives.

The role of risk management is to identify, classify, analyse and manage central risks associated with the operations. The aim is to ensure the achievement of the goals related to the Company’s financial performance, customers and personnel.

Responsibility for the organisation of risk management and the risk management policy rests with the Board of Directors. Risk management is based on the risk assessments carried out during the strategy and annual planning process, which involve identifying key risks, evaluating their likelihood and potential impacts, and defining the means to manage them. Any significant changes in risks associated with the operations and the business environment are evaluated regularly and reported to the Audit Committee and the Board of Directors as part of quarterly interim reporting.

Read more about Kojamo’s near-term risks.

Kojamo’s most significant risks and their management

Risk	Causes of the risk and consequences	Managing the rik
Strategic risks
Decrease in apartment values	• Due to the weak economic situation or inflation and rising interest rates, the volumes of housing sales and portfolio transactions decrease, housing prices decrease, and yield requirements increase	• Active long-term portfolio management based on urbanisation and population growth • Active asset management in improving cash flows and costs management in order to defend values
Renting apartments becomes more difficult due to the oversupply of rental apartments	• Investments in new rental apartments • Measures by society and cities do not result in the right type of apartments • The rents of the properties are priced above the market rent level • Temporary disturbances in urbanisation • Decrease in household sizes does not continue	• Long-term outlook for rental property investments is positive • In the short term, determined letting efforts and dynamic pricing for apartments
Climate change: Transition risk	Risks related to the transition to a low-carbon society: • Increasing regulation; the company is unable to meet the requirements arising from tightened legislation • Increasing cost of energy and raw materials • Shifting market preferences • Cost of indirect emissions • Technological risks • Market risks	• Active following of the EU and national legislation (especially the Energy Efficiency of Buildings Directive) to include new requirements in the planning process in early stage • Implementing the sustainability programme and aiming to meet the net zero target by 2030
Inability to grow in a profitable way	• Transaction market is illiquid • Yield levels are not attractive • Lack of suitable properties for sale • Cost of construction, land and financing high compared to target yield	• Different acquisition sources and active screening of investment opportunities • Usage of alternative financing sources and transaction models (convertible debt, joint venture structures)
Failure to take advantage of the opportunities presented by digitalisation	• Unable to identify the opportunities of digitalisation to ensure competitiveness • Unable to realise the benefits enabled by new technology and digitalisation • Failing to commercialise services • Unable to get partners involved in developing services • Organisational capabilities/operating methods do not meet the requirements of digitalisation • Current technological solutions do not support digital development • User training for digital solutions is not consistent	• Continuous identification and planning of the possibilities to develop processes and services • Regular monitoring the digital landscape and adapting new methods • Collaboration between different functions to ensure a holistic approach to digitalisation • Implementing automation and AI technologies to streamline processes and to improve efficiency • Digitalisation pilots and experiments
Reform of housing and rent legislation	• General changes in housing or specifically in rent legislation • The changes in the housing allowance system may have an impact on students’ position • The new Rental Housing Act is not valid legislation, but this may lead to minor process changes	• Active following and contributing to the legislation process • Identifying and preparing for potential process changes
Demand for rental housing declines	• Continuation of urbanisation and immigration development • Segregation within operational locations • Popularity of home ownership increases from the current level	• Focus on cities where the share of rental housing is highest and growing
Planned divestments are not realised	• Mismatch between what company wants to sell and what is the demand in the market • The volume of planned exits versus market liquidity which leads to the inability to sell and to reduce debt as well as may affect credit rating	• Systematic approach and monitoring of sales processes • Several ongoing sales processes with different risk profiles • Realistic sales targets • Acceptance to sell at market terms with potential writedowns
Financial risks
Increase in market interest rates	• Significant changes in market interest rates, interest margins and spreads • Changes can be caused by the market or the acceleration of inflation	• Loan portfolio is managed by dividing loans between fixed and floating rate loans, by different interest rate renewal periods and by using interest rate derivatives • In accordance with the Group’s Treasury policy, the target hedging ratio is 50–100 per cent
Decreased availability of capital	• Due to banking regulation and/or the domestic or international economic situation, the availability of financing weakens • Market disruptions	• Diversifying the financing sources and financial instruments in the loan portfolio • Diversifying the maturities of loans • Maintaining a strong balance sheet structure
Loss of investment grade credit rating	• Deterioration of the market situation • Deterioration of key performance indicators, in particular coverage ratio, LTV and liquidity	• Proactive measures to maintain key performance indicators • Measures refraining from investments and dividend payment • Sale of properties • Early financing and capital raising
Other risks
Data security and cyber security	• Cyber security attacks may cause service outages and disrupt business operations, compromise communication confidentiality and may block access to critical data, leading to financial losses • The causes of the risks are typical for companies, such as DoS/DDoS attacks, MitM attacks and ransomware • Human errors	• Regular information security risk management • Vendor and technology risk assessment and mitigation • Continuous monitoring and IT service updates • Cyber security training for personnel • Security requirements for IT vendors • Regular audits, best practices, and cyber insurance
Privacy	• Personal data (customers, personnel, stakeholders) is collected, stored or otherwise processed against the principles of data protection legislation (such as GDPR) and internal instructions • The rights guaranteed by legislation for data subjects are not followed • Accountability cannot be demonstrated	• Identifying and understanding data, assessing risks, implementing controls, monitoring and reviewing, training, educating and fostering privacy-first culture
Uncertain geopolitical landscape	• Geopolitical tensions such as war or trade and tariff policies create economic uncertainty in the global economy • Weakening economic and inflation outlook may affect housing market and consumer confidence • Uncertain financial markets • Extreme geopolitical situations affect migration	• Maintaining a strong balance sheet structure • Managing sufficient cost structure • Ensuring attractiveness of Lumo apartments
National economy is not growing	• The global/euro area economic situation weakens • International financial markets are uncertain • Customers’ ability to pay is declining	• Efficient credit control and debt collection processes • Assessment of customers’ risk
Physical and digital product quality does not meet the customer needs (demand)	• The quality of the physical product does not match the quality of the competitors’ products in some micro-markets • Online services require continuous development, including the underlying technology	• Understanding customer needs and market offering • Developing product quality according to strategy
Financial irregularities, external or internal	• Unidentified hazardous work combinations • Missing or inadequate controls • Too extensive access rights to systems • Insufficient and inadequate supervision of work or in the review of invoices • Incomplete or unclear order, commission or documentation • Invoice fraud	• Procurement guideline • Yearly access reviews on systems and user controls • Invoice management system

Page updated 11 February 2026