Audi 2008 Annual Report Download - page 182

163
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
the Audi Group’s financial performance. As in the past, the Audi Group is prepared to actively
tackle this challenge. In keeping with the brand essence “Vorsprung durch Technik,” it has been
continuously improving the fuel efficiency of its vehicles over recent years through numerous
technological innovations in the fields of lightweight construction, aerodynamics and energy
efficiency. The Audi Group is also intensively researching alternative fuels and drive concepts.
RISKS FROM OPERATING ACTIVITIES
There are a number of potential risks associated with the Audi Group’s operating activities that
could lastingly affect its net worth, financial position and financial performance.
These include critical occurrences such as explosions or major fires that could destroy or damage
the Group’s assets and also cause consequential losses by hindering the production process.
Major production problems could also be caused by disruptions to the energy supply and techni-
cal disruptions, in particular to information technology. Although such risks harbor considerable
potential for losses, their probability is viewed as being relatively low. The Audi Group counter-
acts these risks in particular through adequate insurance coverage and preventive measures,
such as fire protection systems. The high flexibility of the Audi production network also reduces
risk.
Further disruption could be caused by supply delays or non-delivery as a result of tool breakage,
losses from natural disasters and strikes at suppliers or in the transportation sector.
The current financial and economic crisis has also led to increasing financial problems at indi-
vidual suppliers and dealers, in some cases leading to their insolvency. The Audi Group limits
such risks by implementing detailed supplier selection, monitoring, steering and support
processes.
The automotive industry’s customary close ties between manufacturer and supplier bring both
economic benefits and growing dependence, which is heightened by the international scale of
suppliers’ operations. The Audi Group counters the resulting risks, for example, by defining
appropriate contractual terms and retaining title over tools used by third-party companies.
As an innovative carmaker, the Audi Group is gradually broadening its model range and entering
diverse new product segments. Not only does it plan meticulously, it also commissions numer-
ous market studies to underpin the decision-making process for new vehicle projects. In spite
of these thorough preparations, a model’s market success cannot always be predicted.
Furthermore, the development of new vehicles and components carries with it a number of
other potential risks. In addition to delays and changes to the product at short notice, these
primarily concern the loss of expertise to service providers outside the Group. The Audi Group
protects itself against this risk by methodically safeguarding its intellectual proprietorship of
core skills and consciously selecting reliable system partners.
LEGAL RISKS
All activities by the corporate bodies, management personnel and employees of the Audi Group
must comply with the prevailing legal and regulatory framework. The Company takes all neces-
sary measures to ensure that all such actions are lawful. In addition to preparing Group-wide
codes of conduct, in particular it provides regular employee training on new legal requirements.
Nevertheless, in light of the growing complexity of legal requirements, the expansion of busi-
ness activities and the high international spread of the Audi Group, there is an increasing risk of
unwittingly, and therefore unintentionally, acting unlawfully. In order to counter such risks, the
Audi Group has installed an internal compliance organization.