Porsche 2011 Annual Report Download - page 193

[21] Financial risk management and financial instruments
1 Hedging guidelines and financial risk management principles
The principles and responsibilities for managing and controlling the risks that could arise from financial
instruments are defined by the executive board and monitored by the supervisory board. The risk management
processes are clearly defined in the Porsche SE group. The processes govern in particular the ongoing
monitoring of the liquidity situation in the Porsche SE group, the monitoring of the enterprise value of Porsche
Zwischenholding GmbH and Volkswagen AG, the development of interest levels on the capital markets and
monitoring of the financial ratios. Any concentrations of risk within the Porsche SE group are also analyzed
using these processes. The processes are based on statutory requirements. The risks are identified, analyzed
and monitored using suitable information systems.
The guidelines and the supporting systems are checked regularly and brought into line with current
market development. The Porsche SE group manages and monitors these risks primarily via its business
operations and financing activities and, where necessary, by using derivative financial instruments. The
derivative financial instruments used were mainly entered into to manage interest rate risks. Without using such
instruments, the group would have been exposed to higher financial risks. In addition, the group entered into
derivative financial instruments for the sale of the remaining shares in Porsche Zwischenholding GmbH held by
Porsche SE.
For further details on risks relating to financial instruments, reference is made to the “Opportunities
and risks of future development” section in Porsche SE’s group management report.
2 Credit and default risk
The credit and default risk arising from financial assets involves the risk of default by counterparties,
and therefore comprises at a maximum the amount of the positive fair values of claims against them. In
addition, there is a credit and default risk at the amount of financial guarantees issued. The default risk of
financial assets is generally taken into account through adequate valuation allowances considering collateral
that has already been provided. Various measures are taken into account to reduce the default risk for non-
derivative financial instruments, such as requesting hold harmless agreements or remuneration for the
assumption of liability. The contracting partners for monetary investments, capital investments and derivative
financial instruments are German and, to a lesser extent, international counterparties. Derivative financial
instruments are entered into in accordance with standardized guidelines, and are continuously monitored.
There are no significant concentrations of risk that are not evident from the notes to the financial
statements and management report.
Other notes
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