Lenovo 2009 Annual Report Download - page 97

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2008/09 Annual Report Lenovo Group Limited
95
3 Financial risk management (continued)
(a) Financial risk factors (continued)
(iv) Credit risk
Credit risk is managed on a group basis. Credit risk arises from cash and cash equivalents, derivative financial
instruments and deposits with banks and financial institutions, as well as credit exposures to customers, including
outstanding receivables and committed transactions.
For banks and other financial institutions, the Group controls its credit risk through monitoring their credit rating and
setting approved counterparty credit limits that are regularly reviewed.
The Group has no significant concentration of customer credit risk. The Group has a credit policy in place and
exposures to these credit risks are monitored on an ongoing basis.
No credit limits were exceeded during the reporting period, and management does not expect any losses from non-
performance by these counterparties.
(v) Liquidity risk
Prudent liquidity risk management includes maintaining sufficient cash and marketable securities, the availability of
funding from an adequate amount of committed credit facilities and the ability to close out market positions. Due
to the dynamic nature of the underlying businesses, Group Treasury maintains flexibility by maintaining availability
of funding under committed credit lines.
Management monitors rolling forecasts of the Group’s liquidity reserve comprises undrawn borrowing facility (Note
33), bank deposits and cash and cash equivalents (Note 26) on the basis of expected cash flows.