Governance and risk management to drive sustainable growth
Sustainable growth is key for Milestone. As a growing video technology company, we encounter both challenges and opportunities that must be addressed to preserve strong relationships with all our stakeholders.
To succeed, Milestone conducts our governance and risk management with the goal of remaining a value-driven and responsible company.
As a truly international company, our governance measures are essential to running the business in an effective and transparent way. We believe in an open and trusting work environment in which our purpose, values, and behaviors serve as practical guidelines for managers and employees.
The role of management
We are a Danish corporation that is governed by our Board of Directors in collaboration with our Executive Directors. Our Board of Directors has four shareholder-elected members and two employee-elected representatives. Milestone’s overall objectives and policies are mandated by our Board of Directors who also approve targets and strategies and ensure that structures are in place to roll out our corporate governance. Topics and polices are presented at board meetings following an annual wheel which ensures that the Board of Directors discusses and approves our strategy outlook, budget status, financial results, annual reports, and reviews policies, including accounting procedures, internal controls, information technology (IT), treasury, insurance and budgeting.
The Board of Directors also makes a yearly review as a self-assessment of the board’s performance to address the efficiency of the board, the board composition and dynamics, the processes supporting its work, the Chairman’s performance and the collaboration with the Executive Directors. The assessment includes topics of governance and risk awareness and how the Board of Directors evaluates the risk management. The Executive Directors are responsible for the day-to-day management and compliance with the overall guidelines and policies approved by the Board of Directors. In this role, they present, submit and recommend proposals for the company’s overall strategy and objectives to the Board of Directors.
The Executive Directors are our Chief Executive Officer and Chief Finance Officer who also constitute the Executive Management Team (EMT) together with our Chief Technology Officer and Chief Sales and Marketing Officer. The four members of EMT collectively represent and govern the business divisions in Milestone. The EMT forms the strategies and drives the business operations supported by a group of Vice Presidents, and each Vice President carries the responsibility for a business division and manages its day-to-day operations together with the team of directors, managers and our many colleagues.
To convey our strategies and objectives to Milestone’s employees, the EMT has a keen focus on communication and visibility, which includes regular presentations of our culture, goals and business news that are live-streamed globally.
Rules of procedure – Annual wheel
Communication of our Strategy 2021
In 2020, we formed our Strategy 2021 for Milestone as a dynamic company built on our powerful open video technology platform. Our Strategy has been communicated and has also been distributed as a one-page strategy map to all employees. The strategy map provides direction for 2021 and summarizes our aspirations, strategy and culture, including strategic focus areas and how we measure success. The strategy map serves as an important tool for our managers to explain our company ambition to their teams and show how their individual contribution connects to our overall objectives and strategy.
Executing strategies and managing business growth requires a shared understanding of governance and risk management, and the EMT has a strong focus on ensuring that risk management is an integral part of the decision-making process.
Our governance and risk management systems support an adequate balance between growth and risk in the Milestone business model. In Business Support, we operate in three pillars: business risk, financial reporting risk and compliance risk, and for each of these risk areas we identify, monitor, measure and manage the company’s risks. Our IT Division controls and monitors our IT security risks.
Our approach to risk management is formulated in our Enterprise Risk Management Policy and we have implemented an ongoing and cyclical process to report on activities within the areas, to identify risks, and to mitigate risk by determining risk responses and actions. Identified risks are assessed in terms of impact drivers like “financial,”“technology,” “market,” “brand,” and “organization” and in respect of the likelihood of an impact materializing.
With these processes, we identify and manage potential events that may affect Milestone’s ability to meet strategic objectives. The risk response activities are monitored and reported to management for an ongoing evaluation and update of processes.
The risk response activities are also integrated into the annual board schedule. The Board of Directors reviews the company’s risk exposure, the system for risk monitoring and reporting, and the company’s insurance coverage.
Milestone is exposed to financial risks, where currency risk is the main risk factor. However, it is not possible to eliminate and avoid these risks entirely. The main objective is to cover commercial risks and to actively manage potential risks in a transparent and disclosed way. The overall objectives and policies for financial risk management are outlined in an internal Treasury Policy which is approved by the Board of Directors.
Milestone has currency exposure resulting from reporting in Danish Kroner (DKK) while generating the majority of revenue in Euros (EUR) and U.S. Dollars (USD). Transactions dominated in other foreign currencies than EUR and USD are not material. In respect of EUR the currency risk is limited due to the ERMII treaty between Denmark and the European Union (EU) which implies that the risk to fluctuations in the DKK/EUR rate is assumed to be insignificant.
The currency risk related to generating revenue in USD is partly offset by maintaining a significant cost share in USD and partly by cash flow hedging. The hedging is based on 24 months rolling forecast and a larger portion of the forecasted amount is hedged the closer the forecasted period gets. The hedging is approved on a monthly basis.
Mitigating business risks
We have identified the relevant strategic business risks which our company may face in 2021. Our approach is to mitigate these business risks and, at the same time, define both challenges and opportunities which the risks may present to Milestone.
To support the risk identification processes, we have included a situational scan of Milestone’s market position and factors such as new regulations and policies, including changes in governments’ approach to globalization and regional markets.
To achieve clear risk ownership and an embedded risk culture within the company, risk sponsors and owners are appointed to focus on driving the mitigating activities and projects in the organization.
Through this process, we have identified our top risks, taken action to raise awareness of each risk and planned actions to mitigate its consequences. Our primary risks included:
Governance of video feeds.
Strategic choices to mitigate risks and create opportunities
By including partner integrators, our Marketplace now provides insights and flexibility to find the partners, components, solutions, and services to build and complete best-of-breed solutions for the individual needs.
Cyber security risks are confronted through our strategic work to safeguard our digital security and as the foundation of investments to continue to strengthen our IT systems and products. In 2020, we fully implemented FIPS encryption onto our products.
Our worldwide market presence gives us the advantages of a strong interaction with local markets, but also a dependency on regional regulations and potential introduction of trade barriers such as product requirements and regulations on privacy and surveillance. In 2020, we have focused on our cross-organizational collaboration, which will continue to be a high priority for 2021. We will continue to interact with our local offices and service providers to maintain our ability to scale worldwide and continue our geo-expansion strategy. This will also include continued people focus to make People First visible and real to all employees, as well as driving our culture, our Behavior Compass, our risk and control framework and our training on code of conduct, business ethics, and compliance.