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Annual report 2023: Operating environment

The operating environment of Erillisverkot continued to be affected by a number of changes. Persistent megatrends are climate change and the crisis of the earth’s ecological carrying capacity, as well as the problems with democracy and the economy. Factors affecting working life include the diversification of working methods and the availability of competent staff. In addition, one of the most important drivers has been the strengthening of security and contingency and, on the other hand, the acceleration of technological development.

Stronger drivers in 2023 included

  • the predicament of the Finnish public economy and the resulting cuts, which also impact the economic capacity of our customers
  • increased insecurity in our society and the international security situation – on the other hand, closer cooperation between Western countries
  • Finland’s membership in NATO and the opportunities related to it
  • new technologies, including AI, quantum physics, satellites, 5G.q

Weak year for the Finnish economy

The economic situation affects the operations of Erillisverkot both directly and through the finances of our customers. Difficult times continued in the global economy. The eurozone suffered from the inflation and high interest rates that were intensified by the Russian war of aggression but that have, by now, started to decline. The slow economic growth in Europe does not seem to enable strongly positive real interest rates, and the easing of the inflation pressure has increased the fear of deflation. Achieving a price balance has become the main goal of central banks.

In Finland, the increase of prices and interest rates reduced consumption and investments among households, resulting in a slightly negative growth in 2023. The recession hit the residential construction sector particularly hard. The situation was also weak in the industrial sector because of high inventories. The employment rate fell slightly, particularly in the construction sector, but it remained at a good level overall, thanks to the strong demand in the service sector.

From the point of view of Erillisverkot, the near-term economic development is twofold

The economic outlook in the near future is shadowed by uncertainties that affect the European security situation particularly strongly, such as the Russian war of aggression, the conflicts in the Middle East and in the South China Sea, as well as the US presidential elections. In Finland and in Europe, in general, the age structure of the population slows down economic growth in the long term, burdening, in particular, the public sector both economically and through labour resources. This can already be clearly seen in competitiveness, which develops notably slower in Finland than in several other countries in our reference group. It is difficult to see a fast driver for this development, but AI and other technological innovations offer some opportunities.

From our point of view, economic development in the near future looks two-fold: Demand for the services of Leijonaverkot is expected to remain strong, and as a capital-intensive activity, it will also require external funding. On the other hand, the implementation of Virve 2 and the transition from the current Virve service will stress the finances with two simultaneous network management costs. The conditional implementation support granted by the Ministry of Finance that spans several years eases the economic impact of the Virve development and enables the sustainable development and continuity of the operations.

Megatrends affecting the operations of Erillisverkot

Megatrend Effect on operations
Climate change and loss of biodiversity Reducing emissions and phasing out from fossil energy are central in combatting climate change. Adaptation to climate change increases the contingency requirements, and extreme weather phenomena challenge the functioning of our services. The need for a shared situational awareness and management, substitute and personnel arrangements increases. These affect the continuity and contingency planning related to our services 24/7/365. Our impact on biodiversity and our dependence of the ecosystem services provided by nature must be analysed, and we need a programme for playing our part in mitigating the biodiversity loss and reducing our dependence on virgin raw materials.
Societal instability and increasing inequality The critical communication and operative services by Erillisverkot promote security and stability in society through the user organisations.
Digitalisation The operations by the authorities depend on, among other things, reliable data, secure information systems and connections. For Erillisverkot, these create business opportunities in wireless data transfer and mobile communication services. Shared network and ICT solutions promote the national economy and security compared to a situation where each security operator or authority would have its own local solutions.
Economic transformation The high inflation rate, rising interest rates and the possible transition to stagflation have a negative effect on the profitability of Erillisverkot through resource availability, unchanging prices and the purchasing power of customers.
Enlargement of NATO, increased security cooperation within the EU and the Nordic countries Erillisverkot has a special-purpose role in providing critical security communications services across national borders, for example, the BroadNet EU project, the pan-Nordic public safety network service and the Galileo PRS service. Finland’s NATO membership brings additional requirements on the functions and services of Erillisverkot.
Population ageing and sufficiency of workforce The ageing of the population and shortage of qualified personnel cause difficulties in recruitment. These obstacles slow down the overall economic development and widen the sustainability gap, which also affects the finances and business of Erillisverkot. Erillisverkot invests in the wellbeing of its personnel and attractiveness of the workplace, for example, by developing equity and diversity within the work community.
Increasing responsibility and sustainable development requirements Erillisverkot is committed to becoming nearly carbon-neutral by 2035. We also strive to increase the carbon handprint of our customers. We develop our operations to achieve energy-efficient and disturbance-free services that can be measured and that meet the high quality requirement of our customers.

We continue our systematic and transparent sustainability work and the integration of it into our operations. In our own operations, we recognise equity and work community well-being, good governance and the importance of responsible procurement practices and human rights across the value chain. We prevent abuse related to these. We are making preparations for renewed sustainability reporting in line with the Corporate Sustainability Reporting Directive (CSRD).


Read more about our year 2023

The year 2023 will be remembered for changes in the security environment, for Finland’s membership in NATO and for the increased level of contingency.

Erillisverkot updated its strategy in 2023. Our vision is to be an impactful and brave security provider in society.

The sustainability work in 2023 was still motivated by the Russian attack on Ukraine and preparedness for a potential energy crisis and power outages.

Erillisverkot updated its sustainability strategy and programme in autumn 2023. We produce the services in a manner that is sustainable environmentally, socially and from the point of view of governance.