BMW 2001 Annual Report Download - page 27

001 BMW Group in figures
004 Report of the Supervisory Board
008 Supervisory Board
011 Board of Management
012 Group Management Report
029 BMW Stock
033 Group Financial Statements
098 BMW AG Financial Statements
104 BMW Group Annual Comparison
106 BMW Group Locations
108 Glossary
112 Index
26
Risk management in the BMW Group
As an enterprise with worldwide operations, the
BMW Group faces a variety of risks. The Board of
Management and the Supervisory Board are regu-
larly informed about risks which have a significant
impact on business development. Business risks are
always viewed together with related opportunities
and only accepted when they lead to a growth in the
value of the business.
In order to identify, evaluate and document the
main risks which could pose a major threat, the
BMW Group uses a comprehensive risk manage-
ment system. This ensures that all relevant risks are
identified, evaluated and communicated within the
Group.
The risk management system consists of three
complimentary processes:
 Generally, decisions are reached after considera-
tion of in-depth project analyses which clearly pres-
ent opportunities and risks. In addition, as part of
the long-term planning strategy and the more short-
term forecasting procedures, the risks and opportu-
nities attached to specific business activities are
evaluated and are used as the basis for setting tar-
gets and implementing appropriate risk mitigation
measures.
 The Group reporting system is used to keep all
decision-makers fully informed and up to date. The
system provides information on a continuous basis
of performance against the targets set and high-
lights changes affecting the market and competi-
tors. Critical success factors are permanently moni-
tored to ensure that unfavourable developments are
identified at an early stage and that appropriate
counter-measures are implemented.
 Overall risk management is supervised centrally
by the group controlling department and is reviewed
by external auditors and the Groups internal audit
department for its appropriateness and effective-
ness. A network of risk managers, who have been
appointed throughout the Group, regularly carry out
risk reviews, identifying and analysing all significant
risks. The results of the review are summarised in a
separate risk report which is then presented to the
Board of Management.
Risks which could threaten the existence of the
Group or which could have a significant negative im-
pact on the assets and liabilities, financial position
and results of operations of the Group, have not
been identified. However, risks can never be ruled
out entirely.
In the course of business operations, the BMW
Group is exposed to various types of risk:
Risks relating to economic factors
 The continuing strong growth on its major inter-
national markets means that the BMW Group is in-
creasingly influenced by the overall economic cli-
mate in the world and its effect on currency parities
and financial markets. The BMW Group mitigates
these risks by intensive monitoring of the markets
and by the use of hedging instruments. Hedging
transactions are entered into only with financial part-
ners of first-class standing. The nature and scope
of such transactions are set out in guidelines appli-
cable throughout the BMW Group.
 Economic fluctuations represent risk factors for
future development which the BMW Group antici-
pates by means of detailed monitoring of the market
and by using early warning indicators. Risk is spread
automatically due to the worldwide activities of the
BMW Group and fluctuations in individual markets
and regions generally only have a small impact on
the performance of the Group.