Lenovo 2016 Annual Report Download - page 27

25
2015/16 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 182 to 188)
Due to the international nature of its business and
continuous changes in local and international tax
rules and regulations, the application of such rules
and regulations to its operations and transactions
involves inherent uncertainty.
The Group Tax department carefully monitors
developments in its business and in the global
tax environment in order to make sure rules and
regulations are applied appropriately and risks
are mitigated where possible.
Intellectual property risk (IP risk)
The Group could suffer if it does not develop and
protect its own intellectual property or its 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.