Reebok 2014 Annual Report Download - page 158

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Risk and Opportunity Report
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adidas Group
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2014 Annual Report
Group Management Report – Financial Review
Risk and Opportunity Report
The adidas Group continuously explores and develops opportunities to sustain earnings
and drive long-term increases in shareholder value. We acknowledge that in our daily
business we are exposed to various risks and that it is necessary to take certain risks
in order to be competitive and ensure sustainable success. 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 principles
We define risk as the potential occurrence of an external or internal event (or series of events)
that may negatively impact our ability to achieve the Group’s business objectives or financial goals.
Opportunity is defined as the potential occurrence of an external or internal event (or series of events)
that can positively impact the Group’s ability to achieve its business objectives or financial goals. We
have summarised risks in four main categories: Strategic, Operational, Legal & Compliance and
Financial. Opportunities are classified in two main categories: Strategic & Operational 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 material risks and opportunities. The Group Risk Management department coordinates
the execution and further development of the adidas Group’s risk and opportunity management
system and is the owner of the centrally managed risk and opportunity management process on
behalf of the adidas AG Executive Board. 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, the Group Internal Audit department also
includes an assessment of the effectiveness of risk management processes and compliance with
the Group Risk Management Policy as part of its regular auditing activities with selected adidas
Group subsidiaries or functions each year.
To facilitate effective risk and opportunity management, we implemented an integrated risk and
opportunity management system, which is based on the integrated frameworks for enterprise
risk management and internal controls developed and published by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Additionally, it has been adapted to more
appropriately reflect the structure as well as company and management culture of the adidas
Group. This system focuses on the identification, evaluation, handling, monitoring and reporting
of risks and opportunities. The key objective of the risk and opportunity management system is
to protect and further grow shareholder value through an opportunity-focused but risk-aware
decision-making framework. Our Group Risk Management Policy, which is available on our intranet,
outlines the principles, processes, tools, risk areas, key responsibilities, reporting requirements
and communication timelines within our Group.