Reebok 2015 Annual Report Download - page 162

GROUP MANAGEMENT REPORT – FINANCIAL REVIEW
Risk and Opportunity Report
158
3
The potential impact is evaluated by utilising five categories: marginal, minor, moderate, significant and
major. These categories represent quantitative or equivalent qualitative measurements. The quantitative
measurements are based on the potential financial effect on the relevant income statement metrics
(operating profit, financial result or tax expenses). Qualitative measurements used are, for example, the
degree of media exposure or additional senior management attention needed. Likelihood represents
the possibility that a given risk or opportunity may materialise with the specific impact. The likelihood of
individual risks and opportunities is evaluated on a percentage scale divided into five categories: unlikely,
possible, likely, probable and highly probable.
When evaluating risks and opportunities, we also consider the earliest time period when the Group’s target
achievement may be impacted, in order to provide a broad perspective and ensure early identification
and mitigation. Short-term risks and opportunities may affect the achievement of the Group’s objectives
already in the current financial year, mid-term risks and opportunities would impact the Group’s target
achievement in the next financial year, while long-term risks and opportunities might only have an effect
on the achievement of the Group’s objectives after the next financial year.
We consider both gross and net risks in our risk assessments. While the gross risk reflects the inherent
(‘worst-case’) risk before any mitigating action, the net risk reflects the residual (‘expected’) risk after
all mitigating action. On the one hand, this approach allows for a good understanding of the impact of
mitigating action taken, and on the other hand it provides the basis for scenario analysis. Our assessment
of risks presented in this report only reflects the net risk perspective. We measure the actual financial
impact of high-level risks that materialised against the original assessment on a yearly basis. In this way,
we ensure continuous monitoring of the accuracy of risk evaluations across the Group, which enables us
to continuously improve evaluation methodology based on our findings.
see Table 02
02CORPORATE RISK EVALUATION CATEGORIES
Likelihood
Highly probable > 85%
Probable 50% – 85%
Likely 30% – 50%
Possible 15% – 30%
Unlikely < 15%
Marginal Minor Moderate Significant Major
Financial
equivalent 1
≤ € 1 million € 1 million –
€ 10 million
€ 10 million –
€ 50 million
€ 50 million –
€ 100 million
≥ € 100 million
Qualitative
equivalent
Almost no media
coverage
Almost no senior
management attention
Limited local media
coverage
Less than 5% additional
senior management
attention
Local and limited
national media coverage
5% – 10% additional
senior management
attention
National and limited
international media
coverage
10% – 20% additional
senior management
attention
Extensive international
media coverage
Over 20% additional
senior management
attention
Potential impact
Risk classification:
■
Marginal
■
Minor
■
Moderate
■
Significant
■
Major
1 Based on operating profit, financial result or tax expenses.
Material risks