Chrysler 2015 Annual Report Download - page 102

102 2015 | ANNUAL REPORT
Corporate Governance
Appetite for Significant Risk
While a formal policy is in process based on the parameters defined below, we align our risk appetite to our business
plan as presented May 2014 (updated January 2016). Risk boundaries are set through our strategy, Code of Conduct,
budgets and policies. We have established Risk Management Committees within our four geographical segments
(NAFTA, LATAM, APAC and EMEA),the luxury vehicle sector with our Maserati operating segment and in the
global components sector with our Magneti Marelli, Teksid and Comau operating segments, which are responsible
for supporting risk governance and utilizing the operational focus of our existing Product (Global and Regional)
and Commercial Committees. The Product Committee oversees capital investment, engineering and product
development, while the Commercial Committee oversees matters related to sales and marketing. Both committees
include executive managers from each of the Companies’ brands, all of whom also have separate functional
responsibilities across all the brands. We also leverage the strategic focus of our GEC, Board of Directors (through the
Audit Committee), CEO and CFO. Our risk appetite differs by risk category as shown below.
Risk category Category description Risk appetite
Strategic Risk that may arise from the pursuit of FCA’s business plan,
from strategic changes in the business environment, and /
or from adverse strategic business decisions.
We are prepared to take risks in a responsible way that
takes our stakeholders’ interests into account and are
consistent with our five year business plan.
Operational Risk relating to inadequate or failed internal processes,
people and systems or external events (including legal and
reputational risks).
We look to mitigate operational risks to the maximum extent
based on cost / benefit considerations.
Financial Risk relating to uncertainty of return and the potential
for financial loss due to financial structure, cash flows,
impairment risk and financial instruments.
We seek capital market and other transactions to
deleverage and strengthen our balance sheet, allowing us to
unlock value and manage our operations on a consolidated
global basis.
Compliance Risk of non-compliance with relevant regulations and laws,
internal policies and procedures.
We hold ourselves, as well as our employees, responsible
for acting with honesty, integrity and respect, including
complying with our Code of Conduct, applicable laws and
regulations everywhere we do business.
Significant Risks Identified and Control Measures Taken
On an annual basis, an enterprise risk assessment is performed, beginning with our operating segments. Risks
identified to have high or medium-high levels of potential impact on our organization and to which we have a high or
medium-high level of vulnerability based on the mitigating factors within our Group are considered significant risks.
Results of the assessment are consolidated into a Group report for review and validation with the Group CFO and
GEC. In addition, risk dashboards are created for the most significant risks to the Group in order to monitor risk
indicators as well as current and mitigation efforts. Once validated, the Group CFO submits to the Audit Committee,
assisting the Board of Directors in their responsibility for strategic oversight of risk management activities.
Each key global focus risk has been classified by the COSO risk categories and corresponding risk factors have been
assigned. Control measures and mitigating actions are subsequently defined for each identified risk. The risk factors,
control and mitigating actions presented below are not all-inclusive. The sequence in which these risks and mitigating
actions are presented does not reflect any order or importance, chance or materiality. For further information regarding
the risks we face, refer to the section —Risk Factors elsewhere in this report.
Risk Category Key Global Risk Description Risk Factor Control / Mitigating Actions
Compliance Regulatory Compliance
Our ability to manage the impact
of regulatory compliance with
vehicle fuel economy (FE) and
greenhouse gas (GHG) and
related requirements (e.g.,
electrification mandates).
Laws, regulations and governmental
policies, including those regarding increased
fuel economy requirements and reduced
greenhouse gas emissions, may have a
significant effect on how we do business
and may adversely affect our results of
operations.
Continually optimize the US FE/GHG
Plans of Intent for the most efficient
application of technology and acquired
credits. Review plan status regularly at
NAFTA Industrial Committee meetings
Group Product Committee (“GPC”)
manages approval for investments in FE/
GHG related compliance.
Evaluate on-road versus laboratory
testing to ensure compliance