BMW 2004 Annual Report Download - page 48

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Legal risks
– The BMW Group is not involved in any court or
arbitration proceedings which could have a significant
impact on the economic position of the Group.
– Like all enterprises, the BMW Group is exposed
to the risk of warranty claims. Adequate provisions
have been recognised in the balance sheet to cover
such claims. Part of the risk, especially relating to the
American market, has been insured externally up to
economically acceptable levels. The high quality of
BMW Group products, underpinned by regular quality
audits and on-going improvement measures, helps
to reduce this risk.
Personnel risks
– As an attractive employer, the BMW Group has
found itself in a strong position for many years in
the intense competition for qualified technical and
management staff. Employee satisfaction and a low
level of employee fluctuation also help to minimise
the risk of know-how drift.
– An ageing and shrinking population in Germany
will have a lasting impact on the conditions prevailing
in the labour, product, services and financial markets.
Demographic changes will give rise to risks and
opportunities which will be even more pronounced
in coming years. The BMW Group carefully reviews
the effects of demographic change on operations,
focusing in particular on the following issues:
– the working environment of the future
– promotion and maintenance of the workforce’s
ability to perform with the appropriate set of skills
– increasing the awareness of employees for
the need to take more responsibility for making
personal provisions for the future
–
individual life-time working models for em-
ployees
The general increase in life expectancy also has
an impact on the pension obligations of the BMW
Group.
BMW AG recognises full provisions for pension
obligations to employees in Germany based on
actuarial valuations. The funds remain in the enter-
prise and thus help to finance on-going operations.
Pension entitlements in the USA and in the
United Kingdom are funded mainly by fixed-income
securities with a high level of creditworthiness and
by investments in stocks. In line with the corridor
approach prescribed by IAS 19, mandatory pension
obligations not recognised as a liability in the balance
sheet, are recognised as an expense over the
ex-
pected remaining average working lives of employees
participating in the relevant plans. In following years,
the short-fall of the various pension funds outside
the corridor will result in an annual expense of euro
42 million.
IT risks
– In the area of information technology, the BMW
Group undertakes various measures relating to
employees, organisational procedures, applications,
systems and networks in order to protect itself from
unauthorised access or misuse of data.
Internal rules for handling data and for the safe
use of information systems apply throughout the
Group. Internal communication reinforces the aware-
ness of employees for security issues.
Amongst the technical measures taken are
certain standard activities such as the use of virus
scanners, firewall systems and access controls at
operating system and application level. These
measures serve to protect confidentiality, integrity
and authenticity.