Mercedes 2012 Annual Report Download - page 125

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Procurement market risks. Procurement market risks arise
for the Group in particular from fluctuations in prices of
raw materials. After the economy-related fall in raw-material
prices in late 2011, that trend reversed in early 2012 and
led to price increases especially in the first quarter. As the year
progressed, lower commodity prices were offset by the loss
in value of the euro. The development of raw-material prices and
their volatilities in the past three years also reflect worldwide
expansive monetary policies as well as diverging economic
expectations in the United States, Western Europe and Japan
and the emerging markets. The outlook for future price
developments remains uncertain, due in particular to the ongoing
development of the debt crisis and the increasing influence
of institutional investors. That influence can be seen in the stron-
ger demand for commodity investments, and is exacerbating
the high volatility of prices in raw-material markets. Vehicle man-
ufacturers are generally limited in their ability to pass on the
higher costs of commodities and other materials in higher prices
for their products because of the strong competitive pressure
in the international automotive markets. Daimler continues
to counteract procurement risks by means of targeted commod-
ity and supplier risk management. We attempt to reduce our
dependency on individual materials in the context of commodity
management, by making appropriate technological progress
for example. Daimler protects itself against the volatility of raw-
material prices by entering into long-term supply agreements,
which make short-term risks for material supplies and the effects
of price fluctuations more calculable. Furthermore, in connec-
tion with some metals, we make use of derivative price-hedging
instruments. Supplier risk management aims to identify sup-
pliers’ potential financial difficulties at an early stage and to initi-
ate suitable countermeasures. Also after the recent crisis
years, the situation of some of our suppliers is still difficult due
to the tough competitive pressure. This has necessitated
individual or joint support actions by vehicle manufacturers
to safeguard their own production and sales. In the context
of supplier risk management, regular reporting dates are set
for suppliers depending on our assessment of them, in
which key performance indicators are reported to Daimler
and any required support actions are decided upon.
Information technology risks and unforeseeable events.
Production and business processes could also be disturbed
by unforeseeable events such as natural disasters or terrorist
attacks. Consumer confidence would be significantly affected
and production could be interrupted by supply problems and
intensified security measures at territorial borders. Informa-
tion technology plays a crucial role in our business processes.
Storing and exchanging data in a timely, complete and correct
manner and being able to utilize fully functioning IT applications
are of key importance for a global group such as Daimler.
Risks of occurrences which could result in the interruption
of our business processes due to the failure of IT systems
or the loss or corruption of data are therefore identified and
evaluated over the entire lifecycles of applications and IT
systems. Daimler has defined suitable actions for risk avoid-
ance and limitation of damage, continually adapts these
actions to changing circumstances. These activities are embed-
ded in a multi-stage IT risk management process. For example,
the Group minimizes potential interruptions of operating routines
in the data centers by means of mirrored data sets, decen-
tralized data storage, outsourced archiving, high-availability
computers and appropriate emergency plans. In order to meet
the growing demands placed on the confidentiality, integrity
and availability of data, we operate our own risk management
system for information security. Despite all the precautionary
measures that we take, we cannot completely rule out the possi-
bility that IT disturbances will arise and have a negative
impact on our business processes.
Reputation. The general public is becoming increasingly aware
of companies’ behavior in matters of ethics and sustainability.
Compliance of corporate actions with applicable law and ethical
principles is essential for the Daimler Group. Furthermore,
customers and capital markets critically observe how the Group
reacts to the technological challenges of the future and the
extent to which we succeed in placing up-to-date and technologi-
cally leading products on the market. Dealing securely with
sensitive data is also a precondition for conducting business
relations with customers and suppliers in a trusting and
fair environment. Daimler applies comprehensive packages
of measures so that risks affecting the Group’s reputation
are subject to formal internal controls.
Specific risks in the area of human resources. Daimler’s
success is highly dependent on our employees and their
expertise. Competition for highly qualified staff and manage-
ment is still very intense in the industry and the regions
in which we operate. Our future success also depends on the
extent to which we succeed over the long term in recruiting,
integrating and retaining executives, engineers and other spe-
cialists. Our human resources instruments take such per-
sonnel risks into consideration, while contributing towards
the recruitment and retention of staff with high potential
and expertise and ensuring transparency with regard to our
resources. One focus of our human resources management
is on the targeted personnel development and further training
of our workforce. Our employees profit for example from
the range of courses offered by the Daimler Corporate Academy
and from the transparency created by LEAD, our uniform
worldwide performance and potential management system.
Because of demographic developments, the Group has
to cope with changes relating to an aging workforce and has
to secure a sufficient number of qualified young persons
with the potential to become the next generation of highly skilled
specialists and executives. We address this issue by taking
appropriate measures in the area of generation management.
An additional factor is that production in Germany might
be impacted in connection with collective wage bargaining.