Porsche 2012 Annual Report Download - page 211

Other notes
[21] Financial risk management and financial instruments
1 Hedging guidelines and financial risk management principles
The principles and responsibilities for managing and controlling the risks that could arise from
financial instruments are defined by the executive board and monitored by the supervisory board.
The risk management processes are clearly defined in the Porsche SE group. The processes
govern in particular the ongoing monitoring of the liquidity situation in the Porsche SE group, the
monitoring of the enterprise value of Volkswagen AG, the development of interest levels on the
capital markets and monitoring of the financial covenants. Any concentrations of risk within the
Porsche SE group are also analyzed using these processes. The processes are based on statu-
tory requirements. The risks are identified, analyzed and monitored using suitable information
systems.
The guidelines and the supporting systems are checked regularly and brought into line with
current market development. The Porsche SE group manages and monitors these risks primarily
via its business operations and financing activities and, where necessary, by using derivative
financial instruments.
For further details on risks relating to financial instruments, reference is made to the “Oppor-
tunities and risks of future development” section in Porsche SE’s group management report.
2 Credit and default risk
The credit and default risk arising from financial assets involves the risk of default by counter-
parties, and therefore comprises at a maximum the amount of the positive fair values of claims
against them. In addition, there is a credit and default risk at the amount of financial guarantees
issued. The default risk of financial assets is generally taken into account through adequate
valuation allowances considering collateral that has already been provided. Various measures
are taken into account as needed to reduce the default risk for non-derivative financial instru-
ments, such as monitoring the credit rating of counterparties, requesting hold harmless agree-
ments or remuneration for the assumption of liability. Moreover, cash, cash equivalents and time
deposits are invested with different counterparties in order to spread risk. The contracting part-
ners for monetary investments, capital investments and, if necessary, derivative financial instru-
ments needed are domestic and, to a lesser extent, international counterparties. Derivative
financial instruments are entered into in accordance with standardized guidelines, and are con-
tinuously monitored.
There are no significant concentrations of risk that are not evident from the notes to the
financial statements and management report.
207