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ANNUAL REPORT 2007 --- adidas Group GROUP MANAGEMENT REPORT – OUR FINANCIAL YEAR - Risk and Opportunity Report
RISK AND OPPORTUNITY REPORT The adidas
Group continuously explores and develops
o
pportun
i
t
i
es to susta
i
n and max
i
m
i
ze earn
i
n
g
s
a
nd also to dr
i
ve long-term
i
ncreases
i
n share
-
holder value. In doing so, we acknowl edge that
it is necessary to take certain risks to maxi
-
mize business opportunities. Our risk and
o
ppor tun
i
ty mana
g
ement pr
i
nc
i
ples prov
i
de
the framework for our
G
rou
p
to conduct busi
-
ness in a well-controlled environment.
RISK AND OPPORTUNITY MANAGEMENT PRINCIPLES The
adidas Group is regularly confronted with risks and oppor-
tunities which have the potential to negatively or positively
impact the Group’s asset value, earnings, cash fl ow strength,
or intangible values such as brand image. We have summa-
rized the most important of these risks and opportu nities
in this report in three main categories: External and Industry,
Strategic and Operational, and Financial.
We defi ne risk as the potential occurrence of external or inter-
nal events that may negatively impact our ability to achieve
short-term goals or long-term strategies. Risks also include
lost or poorly utilized opportunities.
Opportunities are broadly defi ned as internal and external
strategic and operational developments that have the potential
to positively impact the Group if prop erly exploited.
RISK AND OPPORTUNITY MANAGEMENT SYSTEM To facilitate
effective management, we have implemented an integrated
management system which focuses on the identifi cation,
assessment, treatment, con trolling and reporting of risks and
opportunities. The key objective of this system is to protect
and further grow shareholder value through an opportunity-
focused, but risk-aware decision-making framework.
We believe that risk and opportunity management is optimized
when risks, risk-compensating measures and opportunities
are identifi ed and assessed where they arise, in conjunction
with a concerted approach to controlling, aggregating and
reporting. Therefore, risk and opportunity management is a
Group-wide activity, which utilizes critical day-to-day manage-
ment insight from local and regional business units. Support
and strategic direction is provided by brand and global func-
tions. Centralized risk management is responsible for the
alignment of various corporate functions in the risk and oppor-
tunity management process and coordinates the involvement
of the Executive and Supervisory Boards as necessary.
Centralized risk management is also responsible for providing
line management with relevant tools and know-how to aggre-
gate and control risks and opportunities utilizing a consistent
methodology.
ADIDAS GROUP RISK AND OPPORTUNITY MANAGEMENT SYSTEM
Supervisory and Executive Boards
Central Risk Management Brand and Headquarter
Functions
Reporting
Risk and Opportunity aggregation
Identifi cationTreatment
Controlling Assessment