Audi 2014 Annual Report Download - page 200

REPORT ON EXPECTED DEVELOPMENTS, RISKS AND OPPORTUNITIES
REPORT ON RISKS AND OPPORTUNITIES
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Financial burdens and risks are an intrinsic part of our Company’s
growth. One goal is to design the organization and its cost
structures in such a way that we will be able to adapt them
flexibly to the market situation in the future too. We therefore
require a disciplined approach to costs, especially those that
are non-product-based overheads.
In addition, there are general operating risks in the form of
unforeseeable events giving rise to losses, such as explosions
or major fires. Such events could cause both considerable
damage to the Company’s assets and serious disruption to
production processes. In addition, production operations can
be disrupted by power supply failures or technical failures, in
particular of IT systems. Although these risks fundamentally
harbor considerable potential for losses, their probability is
viewed as low. To reduce such risks we have implemented
various preventive measures within the Company, such as fire
protection systems, emergency plans, IT data backup centers
and company fire departments. In addition, adequate insur-
ance coverage has been taken out. The high flexibility of the
worldwide Audi production network, which makes it possible
to move production capacity to other locations, reduces the
risk further. The Audi Group uses its worldwide network of
suppliers and service providers in the development and pro-
duction of its vehicles. To ensure our high quality standards,
we have put in place a comprehensive quality assurance organ-
ization covering the entire value chain.
// OPPORTUNITIES FROM OPERATING ACTIVITIES
The Audi production network has steadily been adapted and
expanded over recent years to bring it in line with international
requirements. In addition to the synergies and cost savings that
the Audi Group enjoys by virtue of being part of the Volkswagen
Group, capacity utilization can be optimally managed across the
worldwide production network, and production planning can be
aligned closely with the requirements of individual markets.
Our market initiative in the United States, which for example
involves the expansion of the dealer network as well as
measures to boost customer satisfaction, is having a positive
impact on our business performance. Working under the
assumption that this initiative is maintained, we see further
potential opportunities for the American market.
Further advantages may arise as a result of deeper collaboration
between manufacturer and dealers. Innovative communication
media and retail platforms such as Audi City pave the way for
more intensive contact with customers. As well as enabling
sophisticated customer care, we believe these offer extra poten-
tial for the manufacturer and dealers to improve profit and costs.
// LEGAL RISKS
The Audi Group is confronted with a highly complex regulatory
framework in the form of a large number of country-specific
legal systems and norms. It needs to comply with and meet
technical, fiscal and customs regulations. These include
tougher COĊ legislation worldwide, accreditation systems and
safety-relevant standards. Legislative changes bring a risk of
legal uncertainty if regulations change very frequently or
unexpectedly, or are subject to differing interpretations. The
consequences could include fines, penalties and subsequent
compensation payments, as well as restrictions on the approv-
al of our products or delays to their market introduction. There
could also be unforeseen legal disputes in such areas as com-
petition law, product liability and patents in particular. The
status quo is reflected financially in appropriately funded
provisions, in accordance with international and national
accounting standards. We back up our decisions and actions in
all legal areas with the expertise of Audi’s internal legal counsel.
In selected cases we also consult external legal experts. We
are continually adapting and improving our internal processes
accordingly and are incorporating supervisory functions.
All activities by the corporate bodies, managers and employees
of the Audi Group must comply with the current legal frame-
work and with internal corporate guidelines. Through the
preventive approach of the Audi Group’s compliance organiza-
tion, we not only actively counter potential misconduct, but
also use a wide range of internal communication and infor-
mation measures to raise awareness among our employees.
Advisory programs on how to handle compliance topics are
extensively offered. In the awareness that misconduct by indi-
viduals cannot be ruled out altogether, we take organizational
steps to ensure that all actions are in accordance with the law.