Audi 2008 Annual Report Download - page 180

161
Management Report
128 Business and underlying
situation
157 Financial performance
159 Net worth
160 Financial position
160 Report on post-balance sheet
date events
161 Risk report
161 The risk management system
within the Audi Group
161 Economic risks
162 Industry risks
163 Risks from operating
activities
163 Legal risks
164 Personnel risks
164 Information and IT risks
164 Financial risks
165 Overall assessment of the
risk position
165 Report on expected
developments
169 Disclaimer
RISK REPORT
THE RISK MANAGEMENT SYSTEM WITHIN THE AUDI GROUP
The goal of the Audi Group’s risk management strategy is to minimize or, if possible, completely
avoid the risks associated with entrepreneurial activity in order to safeguard the Company
against potential losses and against risks to it as a going concern.
To that end, a Company-wide risk management and early warning system is in place within the
Audi Group. This covers AUDI AG and all its subsidiaries from which risks that could potentially
threaten the Audi Group as a going concern could spread.
The integration of risk management tasks into the individual business processes is organized
decentrally at the level of the individual corporate divisions and subsidiaries. All task areas as
well as reporting and documenting obligations for risk management are clearly defined and
regularly monitored to verify that they are up to date.
Potential risks are identified on the basis of predefined spheres of responsibility. Practical
measures for steering and overseeing these risks are implemented by the respective officers,
and the effectiveness of decisions taken is continually monitored. Probabilities are estimated
for all individual risks. The anticipated potential losses from the risk are then quantified on the
basis of the lost profit contribution or the costs incurred. In addition, all necessary measures
and precautions are taken to prevent an identified risk from occurring.
The Board of Management and the Supervisory Board are regularly informed of all significant
risks within the Audi Group.
Within the context of its business activities the Audi Group is confronted with various risk areas,
which are explained in greater detail below. The individual risks described relate to the planning
horizon of 2009 through 2011.
ECONOMIC RISKS
In view of the strong international emphasis of its operations, the Audi Group is highly depend-
ent on international economic conditions. This is particularly true with respect to the important
sales markets of Europe, China, the United States and Japan. Following the deepening financial
crisis in the latter part of 2008 and its extensive spillover into the real economy, forecasts for
global economic growth for the next few years have been scaled back drastically. Whereas eco-
nomic momentum is expected to be greatly reduced in emerging markets, the two-year forecast
for major industrial nations expects anything ranging from stagnation to deep recession. The
automotive industry will also be substantially affected. This was already manifested in the sec-
ond half of the past year in a significant downturn in global demand for cars.
Although the Audi Group has been notably successful in holding its ground in an extremely diffi-
cult economic environment so far, the Company will not be able to fend off the negative conse-
quences of the anticipated economic downturn entirely. The as yet unforeseeable development
of international auto markets represents a threat to the economic success of the Company.
However, thanks to its fresh, attractive product range, the Audi Group believes it is well
equipped to meet these challenges head on. In addition, the extensive and sustainable meas-
ures already implemented by the Company in the past to improve costs and processes will fur-
ther reduce the risk. The Audi Group also keeps a watchful eye on the market with the aid of
early indicators, which helps it anticipate fluctuations in sales so that it can respond by adjust-
ing production accordingly. Being able to transfer production between the various locations
under the production turntable principle and using timebanking provides additional flexibility.