Reebok 2011 Annual Report Download - page 166

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adidas Group
2011 Annual Report
GROUP MANAGEMENT REPORT – FINANCIAL REVIEW
162
2011
03.4 Risk and Opportunity Report Financial opportunities Management assessment of overall risks and opportunities
Financial opportunities
Favourable financial market changes
Favourable exchange and interest rate developments can potentially
have a positive impact on the Group’s financial results. Our Group
Treasury department closely monitors the financial markets to identify
and exploit opportunities
SEE TREASURY, P. 129
.
Management assessment of overall
risks and opportunities
Overall risk profile unchanged versus prior year
Management aggregates all risks reported by different business units
and functions. Taking into account the occurrence likelihood and the
potential financial impact of the risks explained within this report
as well as the current business outlook, adidas Group Management
does not foresee any material jeopardy to the viability of the Group as
a going concern. This assessment is also supported by the historical
response to our financing demands
SEE TREASURY, P. 129
. The adidas
Group therefore has not sought an official rating by any of the leading
rating agencies.
Management remains confident that the Group’s earnings strength
forms a solid basis for our future business development and provides
the necessary resource to pursue the opportunities available to the
Group.
Compared to the prior year, our assessment of certain risks has
changed in terms of likelihood of occurrence and/or potential financial
impact. These changes are reflected in the following table
TABLE 08
.
Nonetheless, the changes in individual risks have no substantial
impact on the overall adidas Group risk profile, which we believe
remains unchanged compared to the prior year.
03.4
08 Changes in corporate risk assessment versus prior year
2011 2010
Likelihood of
occurrence
Potential financial
impact
Likelihood of
occurrence
Potential financial
impact
Strategic and operational risks
Macroeconomic risks Major Significant
Industry consolidation and competition risks Likely Major Probable Significant
Hazard risks Possible Unlikely
Reputation/brand image risks Probable Possible
Inventory risks Probable Possible
Customer risks Likely Highly probable
IT risks Possible Unlikely
Compliance-related risks
Legal risks Likely Significant Possible Moderate
Social and environmental risks Likely Probable
Risks related to product counterfeiting and imitation Probable Highly probable
Product quality risks Likely Possible
Risks related to non-compliance Possible Moderate Unlikely Minor
Financial risks
Interest rate risks Minor Moderate