7 Risk Report
In its business, SinnerSchrader is subject to many risks, which could have a negative impact on the Group’s and the AG’s asset, financial and income situation or could result in SinnerSchrader failing to meet the goals it has set for future business development.
It is necessary to take risks when engaged in entrepreneurial activity aimed at earning profits. To ensure that this success is sustainable it is important to manage these risks. On the one hand, this means evaluating them for probability of occurrence and the possible impact on the asset, financial and income situation and continuously monitoring them. On the other hand, it means identifying measures with which risks can be limited or avoided, and defining the financial strength and the costs of the relevant measures with regard to own core expertise in terms of which risks, which limiting or avoidance measures can be taken and to what extent.
In managing the Group it is one of the key tasks of the Management Board to define general conditions and processes for risk management for the SinnerSchrader Group, to monitor compliance with them and to regularly analyse the development of the risks in each division with the managers of the operating units and administrative divisions.
The SinnerSchrader Group’s risk management system and the risk profiles of the individual divisions are documented in a risk manual. An employee from the financial division of the AG has been appointed the Group’s risk commissioner and has been commissioned to subject the specified risk management system to regular internal evaluation and to document the results at least once a year. Furthermore, it is the task of the risk commissioner to randomly analyse individual divisions on behalf of the Management Board with regard to how far the specified measures to limit or avoid risks are being implemented.
It is the responsibility of the managers of the individual divisions to continuously monitor and manage the risks in their own divisions. If there is a significant increase in the degree of individual risks above a specified threshold, they are required to report it immediately to the Management Board.
Reliable and quick information to the management on the course of business is the basis for good risk management. To this end, SinnerSchrader has set up a controlling and reporting system which reports on a monthly basis on the development of key data on the business activities of the individual divisions and on the financial results.
As far as the key risk areas are concerned, the risk profile of the SinnerSchrader Group has hardly changed in the 2004/2005 financial year. In the following, individual risk areas identified as important will be explained in more detail. This selection does not mean that there can be no significant impact on the asset, financial and income situation of SinnerSchrader from other risks that have not been mentioned.
