Lenovo 2015 Annual Report Download - page 27
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25
2014/15 Annual Report Lenovo Group Limited
Risk Description Key Risk Mitigations
Financial Risk
As the Group operates globally, significant or prolonged
economic instability or financial market deterioration may
materially and adversely impact the Group’s financial
condition.
The Group is exposed to a variety of financial risks, such as
foreign currency risk, cash flow risk, credit risk and liquidity
risks.
The Group Treasury department has put in place a
financial risk management programme that focuses on the
unpredictability of financial markets and seeks to minimize
the potential adverse impact on the Group’s financial
performance.
For more analysis, see “Notes To The Financial Statements”
(pages 160 to 165).
Intellectual Property Risk
The Group could suffer if we do not develop and protect
our own intellectual property or our suppliers are not able
to develop or protect desirable technology or technology
licenses.
The risks include:
• the legal costs of protecting and enforcing intellectual
property rights;
• loss or diminished value of intellectual property as an
asset, as a result of legal findings of unenforceability and
challenges to title or ownership;
• the legal costs to defend against legal action alleging
intellectual property infringement and any potential
resulting settlement or damages;
• design-around costs and negative impact to customer
relationships.
Take full advantage of legal protections by registering
trademarks and applying for patents.
For licensed IP, take appropriate steps to assure its continued
validity.
Risk transfer to suppliers by contract terms to minimize risk
and obtain indemnification from suppliers.
Monitor, develop and execute litigation settlement strategy.
Use patent portfolio if appropriate to decrease potential
damages.
Supply Risk
The Group’s supply chain operations could be disrupted by:
• Catastrophic events
• Unfavorable changes in business, political or economic
factors.
The occurrence of any of the above in our own or our
suppliers’ manufacturing activities and logistic hubs could
result in significant losses and harm our revenue, profitability
and adversely affect our competitive position, and require
substantial expenditures and recovery time in order to fully
resume operations.
Utilize cost and operational analysis to understand potential
impacts. Ensure broad sourcing to minimize impact of regional
catastrophes and ensure adaptation plans in place.
Adequate insurance coverage as last line of defense.