Please activate JavaScript!
Please install Adobe Flash Player, click here for download
ePaper created 2015-05-06, 08:22:31 | version 1.38.0
34 Integrated risk management system Heraeus operates a Group-wide system of risk manage- ment that is integrated into all organizational processes and used to identify risks at an early stage and to docu ment, assess, manage, and monitor these risks in a standardized manner. The aim is to secure the long-term survival of the company. A further objective of the risk management system is to define, implement, and track targeted measures aimed at efficiently tackling risks to the company’s existence. The process brings together findings from risk manage ment, the year-end audit, Group Internal Audit, and Compliance Management. All developments that could have a negative impact on the Group’s business performance must be considered risks. Risk management process Those responsible for operational business and head- office functions identify risk by looking at two criteria: whether the event has a high likelihood of jeopardizing the continued existence of the area of business and whether it will have a significant impact on enterprise value. Only non-cumulative, added risks, i.e. risks that are not mutually exclusive, and risks that are not included in either plan or actual figures, are taken into consideration. Identified risks are evaluated on their probability of occurrence and maximum extent of dam- age, and summarized at the business group, company, subgroup, and Group levels. In addition, the relative extent of damage (the maximum extent of damage multi- plied by probability of occurrence) is expressed as a ratio to shareholders’ equity and to cash and cash equivalents. This allows for the current risk situation to be analyzed systematically and uniformly across the Group. This pro cess culminates in the definition of specific risk mitigation measures. Individual risks that have been identified but are no longer present are deleted from the risk catalog only when this has been substantiated and noted through the implementation of appropriate countermeasures. Risk reporting is fully integrated into the standardized management reporting process. The current status of risks and their potential financial impact are examined every six months. Management and supervisory bodies are regularly informed of the current risk situation. An ad-hoc report must be made if new risks arise during the year that exceed a maximum damage of €25.0 million or if there is a significant change to an already identified major risk (> €25.0 million) either in terms of maximum damage (+ 50 percent) or probability of occurrence (+ 20 percentage points). The efficiency and effectiveness of the risk management system are subject to continuous internal monitoring. Identified Group-wide material opportunities and risks Strategic opportunities and risks Long-term success is based on how customers perceive the company’s competitive advantages and on the ability to generate competitive advantages in the future. Through intensive research and development activities, Heraeus continually strives to generate further competitive advan- tages and therefore further opportunities for revenue growth. This puts the company in a position to create its own alternative technologies to those already in existence, which helps to increase market share. This approach is also reflected in the cluster initiatives. At Heraeus, this risk category focuses in particular on risks associated with threats to core competencies, critical success factors, and strategic objectives, and includes the risk of overlooking key trends in the market or in customer requirements. Opportunity and risk report