Reebok 2009 Annual Report Download - page 144

140 GROUP MANAGEMENT REPORT – FINANCIAL REVIEW Risk and Opportunity Report
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 acknowledge 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 opportunities which have
the potential to negatively or positively
impact the Group’s asset value, earnings,
cash flow 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 define risk as the potential
occurrence of external or internal 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 defined
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 identification, assessment, treat-
ment, controlling and reporting of risks
and opportunities. The key objective
of this system is to protect and fur-
ther grow shareholder value through
an opportunity-focused, but risk-aware
decision-making framework.
We believe that risk and oppor-
tunity management is optimised when
risks, risk-compensating measures and
opportunities are identified and assessed
where they arise, in conjunction with a
concerted approach to controlling, aggre-
gating and reporting. Therefore, risk and
opportunity management is a Group-wide
activity, which utilises critical day-to-day
management insight from local business
units. Support and strategic direction are
provided by brand and global functions.
Our Group Finance function is responsible
for the alignment of various corporate
functions in the risk and opportunity
management process and coordinates the
involvement of the Executive and Super-
visory Boards as necessary. The Group
Finance function is also responsible for
providing line management with relevant
tools and know-how to aggregate and
control risks and opportunities utilising a
consistent methodology.
Of significant importance is our
Group’s Risk Management Manual,
which is available to all Group employees
online. The manual outlines the prin-
ciples, processes, tools, risk areas and
key responsibilities within our Group. It
also defines reporting requirements and
communication timelines. Our Group
supplements this top-down, bottom-up
approach to risk and opportunity man-
agement by employing our Global Inter-
nal Audit department to independently
assess and appraise operational and
internal controls throughout the Group.
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01
ADIDAS GROUP RISK AND OPPORTUNITY
MANAGEMENT SYSTEM
Supervisory and Executive Boards
Group Finance
Function
Brand and Global
Functions
Reporting
Risk and opportunity aggregation
Treatment Identification
Controlling Assessment