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158 Group Management Report – Financial Review Risk and Opportunity Report
Risk and Opportunity Report
The adidas Group continuously explores and develops opportunities to sustain earnings and 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 and system provide the framework for our Group to conduct business in a
well-controlled environment.
Risk and opportunity management
review 2010
As a result of the recent financial and
economic crisis, investor and financial
market expectations with regard to
transparent and comprehensive risk
and opportunity communication have
intensified. In 2010, we therefore
reviewed our risk processes and systems
in order to enhance our Group-wide risk
and opportunity management approach,
to increase internal awareness, as well
as to improve internal and external
reporting where necessary. The task
of operating and evolving the system
has been delegated to the Group Risk
Management function, which is the
owner of the centrally managed risk
and opportunity management process.
The central Group Risk Management
function has defined a network of senior
management representatives, so-called
Risk Owners, which include all direct
reports to the adidas AG Executive Board
and the managing directors of all our
markets. As part of their regular duties,
Risk Owners are obliged to manage and
monitor risks and opportunities within
their area of responsibility.
In the course of this process, we have
developed and implemented an updated
Group Risk Management Policy. This
policy, which is available to all Group
employees online, outlines the principles,
processes, tools, risk areas and key
responsibilities within our Group. It also
defines reporting requirements and
communication timelines.
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 define risk as the potential
financial impact caused by the
occurrence of an external or internal
event (or series of events) that may
negatively impact our ability to achieve
the Group’s business objectives.
Opportunity is defined as the potential
financial impact caused by an external
or internal event (or series of events)
that can positively impact the Group’s
business objectives.
We have summarised the most
important of these risks and opportun-
ities in this Risk and Opportunity Report
in three main categories: Strategic and
Operational, Compliance-related and
Financial.
Risk and opportunity management
system
The adidas AG Executive Board has
the overall responsibility to operate
an effective risk and opportunity
management system that ensures
comprehensive and consistent
management of all significant risks and
opportunities. The adidas AG Supervisory
Board has the responsibility to monitor
the effectiveness of the Group’s risk
management system. These duties are
undertaken by the Supervisory Board’s
Audit Committee. In addition, wherever
relevant, our Global Internal Audit
department also includes an assessment
of Risk Owners’ compliance with the
Group Risk Management Policy within
the scope of their audit, as part of their
regular auditing activities.
To facilitate effective risk and
opportunity management, we have
an integrated risk and opportunity
management system in place, which
focuses on the identification, evaluation,
handling, monitoring 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.
adidas Group risk and
opportunity management system 01
Group Risk Management
- Risk management policy & methodology
- Support
Supervisory and Executive Boards
Monitoring &
Reporting
Handling
Evaluation
Identification
Risk Owners