DHL 2003 Annual Report Download - page 86
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Safeguarding the Future
Managing risks, making the most of opportunities
Deutsche Post World Net operates an opportunity and risk management system
throughout the Group. We aim to receive information about risks and their causes as
early as possible so that we can control undesirable developments without delay.
At the same time, we identify opportunities to grow our enterprise value that we are
able to exploit after weighing up the risks and costs.
Our Group headquarters controls the information flow. The Group’s individual
Business Departments, Corporate Departments, and subsidiaries identify and report
opportunities and risks appropriate to their devolved responsibility. The corresponding
information is updated on a quarterly basis and transferred to higher levels in the
hierarchy depending on predefined materiality levels. Finally, the Board of Management
receives an annual overview of the entire procedure that can also be supplemented
by ad hoc reports throughout the year. The functioning of the opportunity and risk
management system is regularly audited by Corporate Audit on the basis of the
Group manual.
Economic, political, or sociopolitical developments may represent macro-
economic risks. We do not consider the Group to be exposed to any material risks
of this nature at present.
Financial risks arise from changes in exchange rates, commodity prices, or inter-
est rates. We employ primary and derivative financial instruments to limit and reduce
the Group’s exposure to these risks. As a matter of principle, the relevant financial
transactions of the Group are recorded in a treasury risk management program.
This excludes Postbank’s financial transactions, which are recorded in Postbank’s own
bank-specific risk management system. We only enter into derivative transactions
with prime-rated banks within prescribed trading limits. Trading partner credit ratings
are subject to regular checks. The Board of Management is informed regularly and
in a timely manner about hedging measures. Financial instruments are accounted for
in accordance with IAS 39.
Financial risks in detail: Due to the Group’s international presence, the manage-
ment of exchange rate risks plays a central role in risk management. Group companies
are obliged to hedge all local currency risks with . Corporate
Treasury then calculates the net position for each currency and hedges it – depending
on market estimates – with external counterparties. The US dollar is our most import-
ant foreign currency, as we conduct numerous business activities in the USA and in
other countries whose currencies are linked to the US dollar, or depend on the develop-
ment of the US dollar.
Risks from price movements for commodities arise in the Group principally
from the purchase of kerosene, diesel, and gasoline. Fuel surcharges or corresponding
clauses in our master agreements mean that we can partly pass on fuel price increases
to customers. In addition, we reduce our risk by hedging part of our fuel require-
ments in advance.
Corporate Treasury
Corporate Treasury: corporate
function that manages all financial
flows in the Group and advises
the Group companies on questions
of financing, financial risk manage-
ment and payment transactions.