Reebok 2011 Annual Report Download - page 152

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adidas Group
2011 Annual Report
GROUP MANAGEMENT REPORT – FINANCIAL REVIEW
148
2011
03.4 Risk and Opportunity Report Strategic and operational risks
03.4
Strategic and operational risks
Macroeconomic risks
Growth in the sporting goods industry is highly dependent on
consumer spending and consumer confidence. Economic downturns,
socio-political factors such as civil unrest, nationalisation or expropri-
ation, in particular in regions where the Group is highly represented,
therefore pose a significant risk to sales development. To mitigate
this risk, the Group strives to balance sales across key global regions
and also between developed and emerging markets. In addition, we
continuously monitor the macroeconomic and political landscape in
all our key markets to anticipate potential problem areas, so that we
are able to quickly adjust our business activities accordingly upon any
change in conditions.
02 Corporate risk overview
Likelihood of occurrence Potential financial impact
Strategic and operational risks
Macroeconomic risks Likely Major
Consumer demand risks Likely Moderate
Industry consolidation and competition risks Likely Major
Hazard risks Possible Major
Reputation/brand image risks Probable Significant
Own-retail risks Likely Moderate
Risks related to rising input costs Highly probable Major
Supplier risks Possible Major
Inventory risks Probable Moderate
Customer risks Likely Major
Regulatory risks Likely Significant
Risks related to key event or promotion partnerships Possible Significant
Product innovation and development risks Possible Minor
Personnel risks Likely Moderate
IT risks Possible Significant
Compliance-related risks
Legal risks Likely Significant
Social and environmental risks Likely Moderate
Risks related to product counterfeiting and imitation Probable Moderate
Product quality risks Likely Moderate
Risks related to non-compliance Possible Moderate
Financial risks
Credit risks Possible Moderate
Financing and liquidity risks Unlikely Minor
Currency risks Highly probable Major
Interest rate risks Highly probable Minor
03 Corporate risk evaluation categories
listed in ascending order
Likelihood of occurrence Potential financial impact
Unlikely Marginal
Possible Minor
Likely Moderate
Probable Significant
Highly probable Major