BMW 2013 Annual Report Download - page 76

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18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Research and Development
24 Report on Economic Position
24 Overall Assessment by Management
24 General and Sector-specific
Environment
27
Financial and Non-financial
Performance Indicators
29 Review of Operations
47 Results of Operations, Financial
Position and Net Assets
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Risks Report
77 Report on Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
82 Disclosures Relevant for Takeovers
and Explanatory Comments
85
BMW Stock and Capital Markets
business activities around the world. The growing
international scale of operations of the BMW Group, the
complexity of the business world and the whole gamut
of complex legal regulations increase the risk of laws
not being adhered to, simply because they are not known
or fully understood.
The BMW Group has established a Compliance Organi-
sation aimed at ensuring that its representative bodies,
managers and staff act in a lawful manner at all times.
Further information on the BMW Group’s Compliance
Organisation can be found in the section “Corporate
Governance”.
Like all internationally operating enterprises, the BMW
Group is confronted with legal disputes relating, among
other things, to warranty claims, product liability, in-
fringements of protected rights, or proceedings initiated
by government agencies. Any of these matters could,
among other outcomes, have an adverse impact on the
Group’s reputation. Such proceedings are typical for
the sector and can arise as a consequence of realigning
product or purchasing strategies to suit changed market
conditions. Particularly in the US market, class action
lawsuits and product liability risks can have substantial
financial consequences and cause damage to the Group’s
public image. The BMW Group recognises appropriate
levels of provision for lawsuits. A part of these risks,
especially where the American market is concerned, is
insured where this makes business sense. Some risks,
however, cannot be assessed in full or completely defy
assessment. It cannot be ruled out that losses from
damages could arise which are either not covered or not
fully covered by insurance policies or provisions. The
high quality of the Group’s products, which is ensured
by regular quality audits and ongoing improvement
measures, helps to reduce this risk. In comparison with
competitors, this can also give rise to benefits and op-
portunities for the BMW Group. Changes in the regu-
latory environment may significantly influence sales
volume, revenues and earnings performance in specific
markets or economic regions. Further details are pro-
vided in the section “Strategic and sector-specific risks”.
The BMW Group is not currently involved in any court
or arbitration proceedings which, based on the enter-
prise’s assessment, could have a significant impact on
its financial condition.
As in the previous year, the level of risk attached to legal
risks is classified as low. However, it cannot be ruled
out that existing legal risks, if they materialise, could
have a significantly adverse effect on the Group’s finan-
cial condition. Likewise, it cannot be ruled out that new
legal risks, as yet unidentified, could materialise and
have a significant adverse effect on the Group’s financial
condition.