Porsche 2010 Annual Report Download - page 88

level of its subsidiaries and, as part of its integration
function, the indirect risks from investments. The
direct risks of Porsche SE as a single entity mainly
comprise the financial and legal risks that are typical
for a holding company.
The indirect effect of risks from investments
in the operating companies is taken into account by
integrating the three subsystems in one group risk
management system. Regular communication, in
management talks among other things, ensures that
Porsche SE is informed directly of any risks to the
company’s ability to continue as a going concern
should any such risks arise at the investments.
Porsche SE thus bears the responsibility for
monitoring its own risks and, moreover, draws to-
gether all the findings from the existing risk early
warning systems of the Porsche Zwischenholding
GmbH group and Volkswagen group. It thereby en-
sures that risks are aggregated, consolidated, moni-
tored and managed. The design of information flows
and decision-making bodies at group level guarantees
that the executive board of Porsche SE is always
informed of significant risk drivers and the potential
impact of the identified risks so as to take suitable
countermeasures. The audit committee and the entire
supervisory board are kept informed of the risk situa-
tion in regular reports.
The implementation and general effective-
ness of the early warning system for the detection of
risk was checked during the audit of Porsche SE’s
consolidated financial statements
In addition, the financial services segment in
the Volkswagen group is subject to regular special
audits by the Federal Financial Supervisory Authority
pursuant to Sec. 44 of the German Banking Act (KWG)
and other controls by association auditors.
Specific risks faced by Porsche SE
Due its function as a holding company man-
aging its investments in the two operating companies,
Porsche SE faces mainly financial and legal risks.
Financial risks are managed using a comprehensive
liquidity and financial management system that con-
stitutes the central component of the integrated early
warning system for the detection of risk. Freely
available liquidity is a significant financial and risk
indicator as it reflects both the financing and the
investment strategy and is therefore included in the
regular reporting.
Risks originating from the capital
and credit markets
Day-to-day monitoring ensures that the execu-
tive board is informed at an early stage about
changes in the conditions on the credit and capital
markets allowing it to develop and decide on suitable
methods of handling and transferring the risk. The
main focus is placed on the liquidity of the markets
and the development of the cost of capital in com-
parison to competitors. The relationship to creditors
is another key aspect of the strategic considerations
and risk analyses.
Liquidity has been secured until 30 June
2011 by a credit line with a total volume of up to 8.5
billion euro arranged through Porsche SE’s refinanc-
ing completed in 2009. The implementation of the
financing strategy also includes the fundamental
attempt to transfer interest risks to a large extent to
third parties at conditions that are economically
reasonable. In the process, potential risks inherent in
the interest components of the debt capital carried
by Porsche SE are analyzed in terms of the expected
development of interest rates and transferred to third
parties if appropriate.
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