Company risks are only risks if management mess things up.

Sanofi in their 2021 annual report agree with me:

“Unsuccessful management of environmental, social and governance matters could adversely affect our reputation and we may experience difficulties to meet the expectations of our stakeholders.”

The key word here is ‘unsuccessful’.  Unsuccessful management of any part of the business could result in the company experiencing difficulties and worse by allowing the company to go bankrupt. This is probably why many companies consider that manufacturing should be included as a risk. The eight pharmaceutical companies, I chose, [1] have complicated manufacturing processes so that if ‘interruptions or delays’ were to occur the adverse effects would again appear.

International operations are another. These companies choose to move into international markets, and then they classify their move as a risk. Working internationally is difficult, they say, because with so many international regulations and laws, they may not be able to keep up and may not see the changes that governments make.

Or to put it more formally:

‘The negative results of non-compliance with such laws and regulations, could adversely affect our business, our operating results and the financial condition of our Company.’

Non compliance is perhaps another way of saying if they mess up their international operations only then there is a risk but they don’t admit it clearly.

Companies should not classify international operations or manufacturing as a risk, it is, for them, business as usual.

[1] I analysed the risk statements from the 2021 and 2022 annual reports of eight pharmaceutical companies, four based in USA – Abbott Laboratories, Abbvie Inc, Bristol-Myers Squibb Company, Johnson and Johnson, and four based in the Europe – AstraZenica, GlaxoSmithKline, Sanofi, Novartis.