Mercedes 2015 Annual Report Download - page 132

B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 139
Risk assessment takes place on the basis of the probability
of occurrence and the possible impact of the risk according
to the levels low, medium and high. These levels also apply
to the potential impact of opportunities. An analysis of the
probability of occurrence is not conducted here. When assess-
ing the impact of a risk, the effect in relation to EBIT is
basically considered.
At the Daimler Group, risks below €500 million are categorized
as low, between €500 million and €1 billion as medium and above
€1 billion as high. Risk management is based on the principle
of completeness. This means that at the level of the individual
entities, all concrete risks enter the risk management process.
General uncertainties without any clear indication of a possible
effect on earnings are monitored by the internal control system
(ICS). The assessment of the dimensions probability of occur-
rence and possible impact is based on the levels shown
in table

B.58 and is conducted before measures are imple-
mented.
The quantification of each risk and opportunity category in the
Management Report summarizes the individual risks and
opportunities for each category. If the impact of an individual
risk exceeds the amount of €2 billion, this risk is described
separately in the Management Report. If not otherwise presented,
even in the case of simultaneous occurrence of all individual
risks in a risk category, the Group does not expect any effect
in this category of more than €3 billion. In the context of
describing the risk and opportunity categories, significant
changes in comparison to the prior year are explained.
The scope of consolidation for risk and opportunity management
corresponds to the scope of consolidation of the consolidated
financial statements and goes beyond that if necessary. The risks
and opportunities of the divisions and operating units, impor-
tant associated companies, joint ventures, joint operations and
the corporate departments are included.
The tasks of the employees responsible for risk and opportunity
management include, besides identification and assessment,
the development of measures and the initiation of such measures,
if necessary. The objective of such measures is to avoid, reduce
or transfer risks. The utilization or enhancement of an opportunity,
and its partial or full implementation, also require measures
to be taken. The cost-effectiveness of a measure is assessed
before its implementation. The development of all risks and
opportunities of the individual entities and of the related counter-
measures that have been initiated are continually monitored.
Risk and opportunity controlling at the Daimler Group takes place
at the level of the divisions based on individual risks and
opportunities.
The internal control and risk management system with
regard to the accounting process has the objective of ensuring
the correctness and effectiveness of accounting and financial
reporting. It is designed in line with the internationally recognized
framework for internal control systems of the Committee of
Sponsoring Organizations of the Treadway Commission (COSO
Internal Control – Integrated Framework), is continually devel-
oped further and is an integral part of the accounting and financial
reporting process in all relevant legal entities and corporate
functions. The system includes principles and procedures as well
as preventive and detective controls. Among other things,
it is regularly checked, if
– the Group’s uniform financial reporting, valuation and
accounting guidelines are continually updated and regularly
taught and adhered to;
– transactions within the Group are fully accounted
for and properly eliminated;
– issues relevant for financial reporting and disclosure from
agreements entered into are recognized and appropriately
presented;
– processes are established to guarantee the completeness
of financial reporting;
– processes are established for the segregation of duties and
for the “four-eyes principle” (dual accountability) in the
context of preparing financial statements and authorization
and access rules exist for relevant IT accounting systems.
The effectiveness of the internal control system is systematically
assessed with regard to the corporate accounting process.
The first step consists of a risk analysis and the definition of
control. Significant risks are identified relating to the process
of corporate accounting and financial reporting in the main legal
entities and corporate functions. The controls required are
then defined and documented in accordance with Group-wide
guidelines. Random samples are regularly tested to assess
the effectiveness of the controls. Those tests constitute the basis
for self-assessment of the appropriate magnitude and effec-
tiveness of the controls. The results of this self-assessment are
documented and reported in a global IT system. Identified
weaknesses are eliminated with consideration of their potential
effects. At the end of the annual cycle, the selected legal
entities and corporate functions confirm the effectiveness of the
internal control and risk management system with regard to
the corporate accounting process. The Board of Management
and the Audit Committee of the Supervisory Board are
regularly informed about the main control weaknesses and the
effectiveness of the control mechanisms installed. However,
the internal control and risk management system for the account-
ing process cannot ensure with absolute certainty that material
false statements in accounting are avoided.
The organizational embedding and monitoring of risk
and opportunity management takes place through the risk
management organization established at the Group. The
divisions, corporate functions and legal entities are asked
to report about concrete risks and opportunities at regular
intervals. This information is passed on to Corporate Risk
Management, which processes the information and provides
it to the Board of Management and the Supervisory Board
as well as to the Group Risk Management Committee (GRMC).