Huawei 2014 Annual Report Download - page 105

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103Risk Factors
Risk Factors
All "risk factors" listed in this Annual Report, particularly
those covered in this section, refer to key future
uncertainties that may influence the company's business
objectives. Such risk factors have been identified in
Huawei's strategic plans, business models, external
environment, and financial system. "Major risk factors"
refer to events that may significantly impact the
company's competitive landscape, reputation, financial
position, operating results, and long-term prospects in
the coming 18 months. Those outlined below are all
deemed to be major risk factors.
Risk Management System of Huawei
Based on the COSO framework, ISO 31000 risk
management standards, and Huawei's organizational
structure and operating model, Huawei has developed
an ERM system, introduced related ERM policies and
processes, constantly refined its ERM organizations and
operating mechanisms, and promoted risk management
evaluations.
Huawei's ERM system defines the responsibilities of
three major roles in the area of risk management:
■ The FC makes routine decisions on corporate risk
management.
■ Business executives bear the principal responsibility
for risk management in their assigned business
domains.
■ The Enterprise Risk Mgmt Dept assists the FC and
coordinates efforts by business executives to manage
all major risks.
At Huawei, risk management factors are incorporated
into its strategic planning and business planning
processes: Each business domain systematically
identifies and assesses risks during strategic planning,
provides risk countermeasures in its annual business
plan, and manages risk monitoring and reporting as
priorities during daily operations. Identifying the major
risk factors in strategic decision-making and planning
coupled with preemptive measures to control risks in
business planning and execution ensures that Huawei's
business operations remain uninterrupted.
Strategic Risks
Intense competition: The markets in which Huawei
operates are highly competitive in terms of product
pricing and functionality, service quality, and the
timing of new product launches. Rapid technological
advancements, alternative technologies, and changing
industry standards not only result in shorter product
lifecycles, but may also attract new market entrants.
In view of this market environment, Huawei will strive to
find out, understand, and satisfy diverse requirements
of our customers. To consolidate and expand our
competitive advantages and continuously improve our
operating results, we will continue to launch better
products and services while reducing total cost of
ownership for customers. We will continue to invest in
the future to build future technological advantages and
become a low-profile industry leader.
External Risks
Economic environment: Global economic growth
remains, in general, sluggish today, and economic
recovery is unpredictable and varies from region to
region. Therefore, network carriers are cautious about
investing in improving network quality. There is still a
high degree of uncertainty in terms of the future needs
of network infrastructure and services, and these risks
will continue to impact Huawei's operating results.