Which of the risks identified in COH’s 2022 annual report will affect its beta? Which of the risks identified there will affect COH’s unsystematic risks? Business risksCochlear has a sound and robust risk management framework to identify, assessand appropriately manage risks.Our principal business risks are outlined below. These are risks that may have a material adverse effect on thebusiness strategy, financial position or future performance. It is not possible to identify every risk that couldaffect the business and the actions taken to mitigate these risks cannot provide absolute assurance that a riskwill not materialise. Cochlear's Risk Management Policy and details of its risk management standard can befound in the Corporate Governance Statement, both available on the website.RiskPandemicsProductinnovation andcompetitionMisappropriationof Cochlear'sknow-howand intellectualpropertyinfringementMedical deviceregulationsDescription and potential consequencesAs COVID has demonstrated, pandemics have thepotential to impact our markets as elective surgeriesmay be deferred to reduce the strain on healthcaresystems. Travel restrictions, government mandatedshutdowns and potential supply chain impacts couldalso have business impacts.Increased competition exposes us to the risk of losingmarket share and lower average selling prices. This riskmay be exacerbated by failure to produce innovativeproducts and services. We are also exposed to therisk that our products are superseded by medical,biological and/or technological advancementsresulting in alternative products or treatments beingcommercialised, which may impact new business.We are exposed to the risk that our proprietaryknow-how may be misappropriated through hackingof our systems, or by employees, consultants or thirdparties who may have access to systems. Our marketshare is at risk of competitors accessing and using thisinformation.We are also exposed to allegations of infringement bythird parties, including competitors, which could resultin us paying damages and/or receiving injunctionspreventing us from selling our products and/or payingroyalties to continue selling.We operate in a highly regulated industry. Medicaldevices and the information they produce are strictlyregulated in countries where our products are sold.Failure to meet regulations may result in productsanction or recall resulting in loss of sales andreputational harm.Product quality Delivery of high quality and safe outcomes for ourcustomers is central to our ongoing development ofinnovative product. As the developer, manufacturer,marketer and distributor, any failure in productquality might lead to injury, litigation, liability, recalland reputational harm.Strategies used to mitigate the riskIn addition to developed business continuityand crisis management plans, our geographicspread of customers may mitigate the impactof a pandemic on our business.Our active and continuous assessment ofmarkets (new and existing) informs ourstrategy, operating plans and innovationprograms.The creation and protection of intellectualproperty are a key focus for us. We target anannual investment of 12% of sales revenue onR&D aimed at retaining our market leadershipposition and growing the hearing implantmarket.Confidentiality agreements are in place withstaff and third parties with access to ourknow-how. We limit access to key systemsby business need and monitor access byindividuals.We have an increasing and evolving patentportfolio across our technologies to assertagainst competitors, and internal and externallegal resources to manage litigation, and ourinternal product development processesinclude 'freedom to operate' checks.Regulatory uncertainty is assessed as part ofproduct development. We actively monitorthe regulatory environment with regulatorsand incorporate requirements and changesinto our product quality assurance system.Our focus on quality throughout the design,testing, manufacture and post-marketmonitoring of our products ensures highstandards of product safety and efficacy.Effective collaboration with customers alignsclinical processes and technology withevidence-based practices. We also maintainproduct liability insurance.RiskMarket accessCredit andcurrencyPrivacy andinformationsecurityTalentmanagementInterruption toOur reliance on suppliers for key materials and servicesproduct supply carries inherent risk of delay and disruption. Thisrisk is distinct from that where alternative materials/sources and regulatory requirements make substitutioncostly, time-consuming or commercially unviable.While products are manufactured across six sitesglobally, supply may be disrupted by a site becominginoperative. New manufacturing facilities requireregulatory approval for products to be saleable. Suchapproval could take many months or years.Geo-politicalDescription and potential consequencesThe majority of our developed market customersrely on a level of reimbursement from insurers andgovernment health authorities to fund their purchases.Pressure on healthcare budgets globally may lead topressure on reimbursement levels. Healthcare-relatedtaxes by government agencies could also impactcandidates' ability to access our products.riskWe provide credit to a limited number ofgovernments, government-supported universitiesand clinics or major hospital chains. The extensionof credit creates a risk that borrowers fail topay resulting in interrupted cash flow and lowerearnings.Over 90% of our revenues and over 50% of costsare denominated in currencies other than Australiandollars. We bear exchange rate risk from AUDfluctuation against primarily US dollars, Euros,Japanese yen, Sterling, Swedish kroner and Swissfrancs. Long-term permanent changes in marketrates may impact earnings.We handle and store personal information, includinghealth information, for our customers and employees.With expanding information privacy and securityregulations, we recognise its security as a key element ofour relationship with our customers.We operate in a competitive environment in relationto attracting and retaining scientific, technology andengineering talent. The absence of this talent may causekey positions to be unfilled, impacting our ability toinnovate and grow.Our business is subject to risks associated withdoing business internationally. Unexpected geo-political events in foreign countries in which weroperate could adversely affect our supply chain ormanufacturing through increased cost or a reducedchoice of supply, impacting our ability to executeour strategic plans.Strategies used to mitigate the riskWe continue to work with reimbursement andgovernment agencies throughout the world toemphasise the health and economic benefitsof cochlear and acoustic implants.Credit risk is not significantly concentratedand varies by location and customer type.Credit and receivables management(including identifying high risk customers.and potential restrictions on future trading)is executed at a regional level, subject tocountry limits set by the Chief FinancialOfficer and overseen by the Audit & RiskCommittee. Monthly credit balances andageing are monitored by the Board.Financial instruments are used to manageforeign exchange risk in accordance with theBoard approved policy.We work closely with our suppliers to mitigatepotential interruption or delay to supplies.In addition, purchase quantities of inventoryare managed to avoid short-term impacts.Where appropriate, lifetime buys, strategicraw materials purchases, alternate sourcesand other supply chain interventions areundertaken to mitigate production impacts.We also review the business continuity plansfor manufacturing and maintain businessinterruption insurance.We regularly assess our privacy governanceand information security controls to ensurethat when customer information is held it issecure. Whilst we maintain cyber insuranceas part of our overall risk mitigation strategy,our pro-active approach aims to ensure thatcontrols of these risks are prevalent.Talent management programs are inplace, both within Australia and in our keyinternational markets. These programsdevelop the longer-term capabilities requiredfor us to achieve our strategic goals.Whilst the international politics whichinfluence the level of risk are, and willremain, outside our control, we closelymonitor our key suppliers, and assessopportunities to diversify supply and reducekey dependencies. Engagement withgovernments, experts and regulators, enablesus to ensure compliance with the latestregulations, economic sanctions and traderulings.

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Business risks refer to the possible dangers and vulnerabilities that an organization faces in its…