Nokia 2006 Annual Report Download - page 197
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Notes to the Consolidated Financial Statements (Continued)
37. Risk management (Continued)
Nokia’s international creditworthiness facilitates the efficient use of international capital and loan
markets. The ratings of Nokia from credit rating agencies have not changed during the year. The
ratings as at December 31, 2006 were:
Shortterm Standard & Poor’s A1
Moody’s P1
Longterm Standard & Poor’s A
Moody’s A1
Hazard risk
Nokia strives to ensure that all financial, reputation and other losses to the Group and our customers
are minimized through preventive risk management measures or purchase of insurance. Insurance is
purchased for risks, which cannot be internally managed. Nokia’s Insurance & Risk Finance function’s
objective is to ensure that Group’s hazard risks, whether related to physical assets (e.g. buildings) or
intellectual assets (e.g. trademarks, patents) or potential liabilities (e.g. product liability) are
optimally insured.
Nokia purchases both annual insurance policies for specific risks as well as multiline and/or multi
year insurance policies, where available.
Notional amounts of derivative financial instruments(1)
2006 2005
EURm EURm
Foreign exchange forward contracts(2) **************************************** 29 859 29 991
Currency options bought(2) ************************************************** 404 284
Currency options sold(2) ***************************************************** 193 165
Interest rate swaps (receive fixed interest) ************************************ —50
Cash settled equity options(3) ************************************************ 45 150
(1) Includes the gross amount of all notional values for contracts that have not yet been settled or
cancelled. The amount of notional value outstanding is not necessarily a measure or indication of
market risk, as the exposure of certain contracts may be offset by that of other contracts.
(2) As at December 31, 2006 notional amounts include contracts amounting to EUR 2.4 billion used to
hedge the shareholders’ equity of foreign subsidiaries (at December 31, 2005 EUR 2.4 billion).
(3) Cash settled equity options are used to hedge risk relating to incentive programs and investment
activities.
F62