Merck 2014 Annual Report Download - page 128

123GROUP MANAGEMENT REPORT → Report on Risks and Opportunities
RISK AND OPPORTUNITY ASSESSMENT
Risks
The significance of risks to the Group is calculated on the basis of
their possible negative impact on the forecast financial targets in
conjunction with the probability of occurrence of the respective risk.
In line with these two factors, risks are classified as “high”, “medium”
or “low”. The underlying scales for measuring these factors are
shown below:
PROBABILITY OF OCCURRENCE
Probability of occurrence Explanation
< 20 % Unlikely
20 – 50 % Possible
51– 80 % Likely
> 80 % Very likely
DEGREE OF IMPACT
Degree of impact Explanation
> € 50 million
Critical negative impact on the net assets, financial position
and results of operation
€ 20 – 50 million
Substantial negative impact on the net assets, financial position
and results of operations
€ 5 – 20 million
Moderate negative impact on the net assets, financial position
and results of operations
< € 5 million
Insignificant negative impact on the net assets, financial position
and results of operations
The combination of the two factors results in the risk matrix below,
which shows the indi
vidual risks and their significance to the
Group.
RISK MATRIX
Impact Risk matrix
> € 50 million Medium Medium High High
€ 20 – 50 million Medium Medium Medium High
€ 5 – 20 million Low Medium Medium Medium
< € 5 million Low Low Low Low
Probability of occurrence < 20 % 20 – 50 % 51– 80 % > 80 %