Audi 2015 Annual Report Download - page 193

REPORT ON EXPECTED DEVELOPMENTS, RISKS AND OPPORTUNITIES
REPORT ON RISKS AND OPPORTUNITIES
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>Automobili Lamborghini S.p.A.
>Ducati Motor Holding S.p.A.
>DUCATI DO BRASIL INDÚSTRIA E COMÉRCIO DE
MOTOCICLETAS LTDA
>Italdesign Giugiaro S.p.A.
>VOLKSWAGEN GROUP ITALIA S.P.A.
Subsidiaries that are not included in the risk consolidation
group are included in the Risk Management System of the Audi
Group on the basis of Group-wide minimum requirements for
the Risk Management System and Internal Control System.
This is subject to a majority interest or management responsi-
bility being held.
/// RISK IDENTIFICATION, ASSESSMENT AND
DOCUMENTATION
The individual risks reported by the risk managers in the respec-
tive divisions, departments and subsidiaries are recorded and
evaluated in the GRC process using a specially developed IT
system. Risks are evaluated in accordance with the Volkswagen
Group’s standard system. Multiplication of the probability of
occurrence and potential impact criteria yields the individual
risk score. The probability of occurrence is determined by the
risk manager based on ranges and thus operationalized. The
second criterion of impact is broken down into various sub-
categories. This allows additional criteria such as the strategic
relevance of the risk to be considered as well as material and
non-material evaluation aspects.
Calculation of risk score
We fundamentally adopt a net perspective, in other words the
probability of occurrence and potential impact are considered in
the light of any corrective action already taken. The appropri-
ateness and plausibility of risk reports are examined on a
random basis in more in-depth interviews conducted by the
central GRC organization with the appropriate divisions and
companies. Based on the process documentation, the inde-
pendent auditor also assesses whether the Board of Manage-
ment has taken appropriate measures for the early indication
of risks in accordance with Section 91, Para. 2 of the German
Stock Corporation Act (AktG).
/// MONITORING OF EFFECTIVENESS,
REPORTING, SUBSEQUENT ACTIONS
To comply with the requirements under commercial law, by way
of an operational check the departments or external assessors
seek proof of concept for the main risks and also where correc-
tive action and management checks substantially reduce the
risk. If their effectiveness is deemed inadequate, the depart-
ment must ensure that improvements are made as a subse-
quent action. Central Risk Management monitors implementa-
tion. Reports on the Risk Management System and Internal
Control System as well as on the further development of risk
management are submitted both regularly and on an ad hoc
basis to the Board of Management and to the Audit Committee
of the Supervisory Board. The regularity and effectiveness of
selected elements are also monitored by Internal Audit and by
external auditors in their capacity as impartial bodies.
// ONGOING EXAMINATION AND REFINEMENT
Significant changes in the risk situation that may occur at short
notice due to unexpected external events, for example, are
dealt with by a separate process in the Audi Group. A signifi-
cant change in the risk situation occurs if there is a risk that
poses a threat to the Company as a going concern or to its
strategy, or if critical monetary threshold values are exceeded.
Other triggers include inaccuracies in financial reporting and
compliance breaches. All Group companies are obliged to
inform the Board of Management of AUDI AG and the central
GRC organization of such developments by means of ad hoc
reports. Priority is given to defining preventive measures for
limiting losses, communicating the updated risk situation to the
corporate bodies and examining whether an ad hoc announce-
ment meeting capital market requirements needs to be pub-
lished.
Because of the diesel issue within the Volkswagen Group, since
September 2015 additional analyses have been carried out in
partnership with the risk compliance coordinators and mem-
bers of the task force set up by the Company to investigate the
diesel issue. The risk and compliance officers of AUDI AG sub-
sidiaries were also involved. The updated risk situation was
presented to the Board of Management and the Audit Commit-
tee of the Supervisory Board.
ProbabilityRisk score Impact