Reebok 2008 Annual Report Download - page 111

adidas Group Annual Report 2008 107
adidas Group risk and opportunity management system
Risk and Opportunity Report
The adidas Group continuously explores and
develops opportunities to sustain and maximise
earnings and also to drive long-term increases
in shareholder value. In doing so, we acknowl-
edge that it is necessary to take certain risks to
maximise business opportunities. Our risk and
opportunity management principles provide the
framework for our Group to conduct business
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-
rised the most important of these risks and opportunities 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 utilised opportunities.
Opportunities are broadly defi ned as internal and external
strategic and operational developments that have the potential
to positively impact the Group if properly exploited.
Risk and opportunity management system
To facilitate effective management, we have implemented an
integrated management system which focuses on the iden-
tifi cation, assessment, treatment, controlling 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 optimised
when risks, risk-compensating measures and opportuni-
ties are identifi ed and assessed where they arise, in conjunc-
tion with a concerted approach to controlling, aggregating
and reporting. Therefore, risk and opportunity management
is a Group-wide activity, which utilises critical day-to-day
management insight from local and regional business units.
Support and strategic direction is provided by brand and global
functions. Centralised risk management is responsible for
the alignment of various corporate functions in the risk and
opportunity management process and coordinates the involve-
ment of the Executive and Supervisory Boards as necessary.
Centralised risk management is also responsible for providing
line management with relevant tools and know-how to aggre-
gate and control risks and opportunities utilising a consistent
methodology.
Of signifi cant importance is our Group’s Risk Management
Manual, which is available to all Group employees online. The
manual outlines the principles, processes, tools, risk areas
and key responsibilities within our Group. It also defi nes
reporting requirements and communication timelines. Our
Group supplements this top-down, bottom-up approach to
risk and opportunity management by employing our Global
Internal Audit department to independently assess and
appraise operational and internal controls throughout the
Group.
Supervisory and Executive Boards
Central risk management Brand and headquarter functions
Reporting
Treatment Identifi cation
Assessment
Risk and opportunity aggregation
Controlling