annual financial statement 2011 - conwert Immobilien Invest SE

INTRO |
| CONSOLIDATED FINANCIAL STATEMENTS | FINANCIAL STATEMENTS
MANAGEMENT REPORT
Risk management report
ORGANISATION AND IT
The risk category “Organisation and IT” covers all potential scenarios that may occur as part of the regular management tasks
including the selection and remuneration of employees and leadership as well as from organisational aspects and in all areas
of information technology. The individual risks summarised under this category were assigned to the respective risk owners in
the central group functions and, where there is a direct relation with the operating segments at the regional level, are managed
by the regional managements as additional risk owners at the same time. As the central and regional activities are consistently
coordinated, duplications of effort in processes are avoided without neglecting regularity aspects.
Due to the special importance of the entire IT segment from a risk perspective, the existing IT strategy has been advanced further
so that, consequently, no limitations of the operating activities of the conwert Group are to be expected in the future. However,
situations may occur, especially as a result of unforeseeable criminal intrusion, which disrupt the proper operations of the IT
infrastructure in such a way that it may be detrimental to the conwert Group.
MARKET
The risk category market covers risks that result from developments in markets in which the conwert Group operates. They
include risks arising from customer relations or the competitive situation. Therefore, the appointed risk owners in the operating
segment at the regional level specifically monitor the competition and analyse the development of demand in the different
markets on an ongoing basis. Due to the multi-dimensional diversification of the market services of the conwert Group, which is
represented in several regionally and factually differentiated markets, there are no individual risks or risk clusters which could
directly endanger the Group’s existence from a today’s perspective. Should any major permanent adverse changes occur in the
future, this may, nevertheless, lead to considerable negative effect on the equity situation of the Group.
ECONOMIC AND POLITICAL ENVIRONMENT
The risks related to the economic and political environment were also assigned to the central function Investor Relations as the
risk owner. This category includes primarily those risks which occur as a result of changes in legislation or macro-economic
developments. If such risks materialize, the access to capital and liquidity for the conwert Group or its customers could become
so difficult that a further participation in the market appears to be unfavourable in the long term or even has to be ruled out. Such
risks may result from changes in the government’s subsidy or fiscal policy related to the establishment, purchase and sale of
properties or due to inflationary economic developments or negative developments in the capital markets which are directly or
indirectly influenced by overriding political interests. The conwert Group currently has a widely diversified and balanced financing
structure and pursues a continuous improvement in the equity ratio. If borrowed or equity capital should become dramatically
more expensive, this could also lead to a significant negative impact on the conwert Group.
OPERATIONS
Operating risks are those risks that result directly or indirectly from operating activities. The conwert Group is represented
primarily in the letting, sale and service segments in its core markets. As the risk owners, the regional managements manage
all identified risks in the above mentioned business units. The risks result from the respective service provision processes and,
accordingly, are minimised through appropriate preventive measures integrated in the processes and controls so that no damage,
that may endanger continued operations, can arise from a today’s perspective. However, damage that jeopardises operations
cannot be ruled out completely as this risk category also includes risks that cannot be influenced or fully covered by insurance.
Such risks are, for example, natural hazards of all kinds or unconventional criminal activities, which are carried out on a large
scale over a longer period of time.
31