DHL 2010 Annual Report Download - page 109

In the  ,  division, we purchase transport services
from airlines, shipping companies and freight carriers rather than providing them our-
selves. As a result, in a worst-case scenario there is a risk that we shall not be able to
pass on all price increases to our customers and will be forced to absorb these costs and
cut into our own margins.  e extent of the risk essentially depends on the trend in the
supply, demand and price of transport services as well as the duration of our contracts.
Our   division provides customers in a variety of industries with
solutions along the entire logistics chain. Our success is linked closely to our custom-
ers’ business trends. Since we o er our customers a widely diversi ed range of prod-
ucts indi erent sectors all over the world, the incumbent risks are balanced out on
the whole. Moreover, our future success also depends on our ability to continuously
improve our existing business and to grow in our most important market segments
and customer solutions.
Risks arising from internal processes
 e mark of the quality of logistics services is the extent to which they are supplied
reliably and on time. To ensure that these criteria are met, we provide a complex opera-
tional infrastructure. Quality can be compromised by any problems that may arise with
regard to posting and collection, sorting, transport, warehousing or delivery. We take
preventive measures to guard against disruptions or malfunctions in our operational
processes. Should disruptions nonetheless occur, we have drawn up emergency plans
to minimise the consequences.
As an example, back in  we began formulating plans in all divisions to provide
for a pandemic emergency, including setting up an international crisis team. In the
event of a pandemic, we want to minimise the risk of infection for our employees and
maintain our business operations.
Given that emergency preparations have been made as well as the fact that we render
our services de-centrally in more than  countries, we regard the probability that
the Group will experience signi cant downtime as low. Potential  nancial impacts are
reduced by our insurance policies.
In addition, we use our First Choice methodology to continuously improve our
processes and align them even more closely to the requirements of our customers.
Should this involve capital expenditure, the Board of Management decides on any invest-
ments in excess of   million. Board of Management committees make decisions on
investments of more than   million, with a lower threshold of   million applying to
Global Business Services and the Corporate Center.  e Board of Management members
are regularly informed of investment decisions so that they can identify signi cant risk
early and take any necessary countermeasures.
As a service provider, we do not conduct research and development in the narrower
sense.  ere are therefore no material risks to report in this area.
Deutsche Post DHL Annual Report 
Group Management Report
Outlook
Opportunities and risks
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