Porsche 2011 Annual Report Download - page 98

Porsche SE functions as a holding company
for its investments in the operating companies Por-
sche Zwischenholding GmbH and Volkswagen AG.
The income of Porsche SE consists mainly of the
dividend payments of these two equity investments.
The risks from investments only have an indirect
effect on Porsche SE in the form of valuation, con-
solidation, dividend and liability effects. In addition,
there are risks from the basic agreement and the
associated corporate restructuring as well as from
the investment held by Volkswagen AG in Porsche
Zwischenholding GmbH.
The Porsche SE group's risk management
takes into account the structure of the group. It con-
sists of three autonomous, but nevertheless inte-
grated risk management subsystems. Two of these
subsystems are located at the level of Porsche
Zwischenholding GmbH and Volkswagen AG respec-
tively (we refer to the section “Opportunities and risks
of significant investments”). The risks of relevance at
the level of Porsche Zwischenholding GmbH are cov-
ered by Porsche AG’s early risk warning system which
this company has established pursuant to Sec. 91 (2)
AktG for the Porsche AG group. The subsystems are
intended to identify, manage and monitor the risks
resulting from the operating activities of the two
investments that could jeopardize the investments’
ability to continue as a going concern. Thus, the two
investments are themselves responsible for their local
risk management, but are required at the same time
to inform Porsche SE as the holding company at an
early stage of any risks jeopardizing the investment’s
ability to continue as a going concern.
The third subsystem, the risk management at
the level of Porsche SE, monitors the direct risks of
Porsche SE as a single entity, the risks at the 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 of 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, for
example, in management talks and by forwarding risk
reports to Porsche SE, 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 the decision-making bodies at group level guaran-
tee 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 continuously informed of
the risk situation 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
GROUP MANAGEMENT REPORT98