Nokia 2009 Annual Report Download - page 254

33. Risk management (Continued)
• FX derivatives designated as forecasted cash flow hedges and net investment hedges. Most of the
VaR is caused by these derivatives as forecasted cash flow and net investment exposures are not
financial instruments as defined under IFRS 7 and thus not included in the VaR calculation.
Table 1 Foreign exchange positions ValueatRisk
2009 2008
VaR from financial
instruments
EURm EURm
At December 31 .................................................... 190 442
Average for the year ................................................ 291 337
Range for the year .................................................. 160520 191730
Interest rate risk
The VaR for the Group interest rate exposure in the investment and debt portfolios is presented in
Table 2 below. Sensitivities to credit spreads are not reflected in the below numbers.
The sizeable difference between the 2009 and 2008 numbers is mainly due the fact that Nokia issued
bonds with long maturities during the first half of 2009, which resulted in a significant increase in
the Group’s exposure to longterm interest rates.
Table 2 Treasury investment and debt portfolios ValueatRisk
2009 2008
EURm EURm
At December 31 .......................................................... 41 6
Average for the year ...................................................... 33 10
Range for the year........................................................ 452 425
Equity price risk
The VaR for the Group equity investment in publicly traded companies is insignificant.
(b) Credit Risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in
financial loss to the Group. Credit risk arises from bank and cash, fixed income and moneymarket
investments, derivative financial instruments, loans receivable as well as credit exposures to
customers, including outstanding receivables, financial guarantees and committed transactions. Credit
risk is managed separately for business related and financialcredit exposures.
Except as detailed in the following table, the maximum exposure to credit risk is limited to the book
value of the financial assets as included in Group’s balance sheet:
2009 2008
EURm EURm
Financial guarantees given on behalf of customers and other third parties ........... —2
Loan commitments given but not used ....................................... 99 197
99 199
F80
Notes to the Consolidated Financial Statements (Continued)