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ePaper created 2015-05-06, 08:22:31 | version 1.38.0
39HERAEUS | FINANCIAL REPORT 2014 | GROUP MANAGEMENT REPORT External opportunities and risks In addition to the aforementioned opportunities, there are other factors that resist attempts to affect them, making them difficult to control and describe. Opportunities may arise from changing trends and fashions that are directly reflected in demand, for example in the electronics sector. The general demographic shift presents another important and specific opportunity, with the medical products busi- ness in a position to benefit from increases to life expec- tancy and the illnesses associated with old age. On the risk side, there are a number of potential threats that are beyond the control of Heraeus and that are diffi- cult to quantify. Heraeus includes among these instances of force majeure (natural disasters, epidemics) and risks resulting from sociocultural and political developments in specific countries. External risk also includes reputational risk, which can lead to a direct or indirect loss of standing for the company. Precious metal opportunities and risks In the precious metal trading business, opportunities arise in particular from fluctuations in the markets and in prices for precious metals, which can trigger an increase in demand both from industrial customers and investors. There is particular potential for growth in Asia. The pre- cious metal trade is governed by the guidelines of the indi- vidual Heraeus trading companies located in Hanau, New York, Hong Kong, and Shanghai. The trading companies are only allowed to conduct precious metal transactions on the basis of a physical underlying customer transaction. Positions can only be accumulated and held within closely defined risk limits that are monitored on a daily basis. All transactions are recorded and continuously monitored in an electronic trading system. Commonly used hedging instruments are employed to hedge price risks. Such instruments include precious metal spot and futures transactions, and precious metal swaps and leases (leases and cash-and-carry transac- tions). In accordance with the principle of separation of functions, the ongoing monitoring of compliance with prescribed risk limits and thresholds is carried out by employees who do not report to the Trading division. Other opportunities and risks Sufficient precautions have been taken to adequately address the risk in connection with responsibility for environmental protection, workplace health and safety, IT malfunctions, and the potential risks of all other internal services. The probability of the crystallization of risks in these areas is therefore restricted to a minimum, which means that substantial impacts on the Group can largely be ruled out. Overall assessment of opportunities and risks In the individual business segments, the fast-moving technology landscape and the unexpected emergence of innovations will continually present the company with opportunities that cannot currently be foreseen. For this reason it is important that Heraeus keeps a close watch on market trends and on the latest research and develop- ment activities. With systems in place for risk measurement and limitation, Heraeus is also able to meet the need for early risk detec- tion. At the present time, no risks to the Group’s ability to continue as a going concern can be identified with regard to its financial position and financial performance.