Huawei 2012 Annual Report Download - page 85

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Risk Factors
82
Risk Factors
All risk factors mentioned in this Annual Report,
particularly those outlined in this section, refer to
key future uncertainties that could have a material
effect on the company’s business objectives. They
were identified from the company’s strategic
planning, business model, external environment,
and financial system. Major risk factors are events
that will significantly impact the company’s
competition landscape, reputation, financial
conditions, operating results, and long-term
prospects within the next 18 months. Hereinafter,
all risk factors refer to major risk factors.
Huawei’s Risk Management System
Based on the Committee of Sponsoring
Organizations of the Treadway Commission (COSO)
framework and in line with our organizational
structure and operating model, Huawei designed
and implemented an enterprise risk management
(ERM) system with a corresponding ERM policy. The
ERM system consists of three major organizations/
roles and an operational mechanism:
The Finance Committee (FC) makes routine
decisions on corporate risk management.
All business executives are responsible for risk
management of their assigned domains.
The Enterprise Risk Mgmt Dept assists the
FC and all business executives in controlling
corporate-level risks.
Huawei has incorporated risk management factors
into its strategic planning and business planning
processes. Through strategic planning, all domains
systematically identify and assess their risks. In
the 2012 business plan, all domains developed
countermeasures against key risks, thereby giving
priority to risk monitoring and reporting in daily
operations. The company ensures the continuity
of business operations by taking risks into account
during strategic decision making and planning,
while also preemptively controlling risks in business
plans and execution.
Strategic Risks
Intense competition: The markets in which
Huawei operates are highly competitive in terms
of price, functionality, and service quality, as
well as the timing of new product and service
development. In certain geographical markets,
our main competitors may offer more attractive
prices, products, services, or other incentives. The
rapid development of science and technology, and
changes in alternative technologies or industry
standards will lead to shorter product lifecycles
and may attract more new entrants into the
markets in which we operate.
In this market context, the ability to fully
understand and satisfy customer needs is a
prerequisite as technologies change rapidly and
competition intensifies. To stay competitive
and secure our expected operating results, we
must constantly introduce new products and
functionalities into the market while reducing the
total costs for our customers.