2011 Registration Document - Valeo

Crisis management
The Valeo Risk Management Manual contains a specific
directive on the prevention of emergencies and on situationspecific
contingency plans. This directive requires each site
to draw up an emergency plan for dealing with potential
incidents.
2.1.3 Legal risks
Intellectual property risks
(patents and trademarks)
The major intellectual property risk that Valeo faces is
counterfeiting, which can have an immediate adverse
effect on Group sales and earnings, and gradually harm the
reputation and quality image of the products involved.
As far as possible and where warranted, Valeo’s industrial
expertise and the innovations generated by the Group’s
research are covered by patents to protect its intellectual
property. Valeo is therefore a major patent filer in its business
sector, as set out in Chapter 1, section 1.3.4, “Research and
development”, page 29 . These patents, covering the major
automotive markets, provide the Group with an effective
weapon against counterfeiting.
To identify infringements of its patented rights, for several
years the Group has conducted customs surveillance in
various countries including China, so that it can be alerted
to questionable imported and/or exported products. Besides
customs surveillance, whenever products shown at industry
trade shows seem to involve the reproduction of patented
technologies, Valeo pursues every lawful course available in
order to stop and penalize the infringement.
In the ordinary course of its business, Valeo is paid royalties
for patents licensed to other companies.
Risks related to product and service liability
Valeo is exposed to warranty claims by customers with
respect to the products and services it sells. Sales of
products and services are covered by statistical provisions
Risk Factors
Main risks
A crisis management tool was put in place in 2008 enabling
each site to be aware of its potential crisis situations and
make effective preparations for dealing with them.
that are regularly reviewed to reflect past return rates and to
cover the expected cost of customer returns. In all, provisions
for customer warranty claims came to 192 million euros at
December 31, 2011.
Although Valeo pursues a policy aimed at achieving quality
excellence, the Group may at times be confronted by major
quality and safety issues resulting in a large-scale recall
campaign for a given production period. If a quality problem
were to trigger a major recall, it could have a substantial
impact on the Group’s financial position and image. To protect
itself against this risk, the Group has an insurance policy that
covers recall costs (above the deductible amount), i.e., the
cost of returning vehicles to the garage and removing and
replacing the faulty parts, with the Group bearing the cost
of these parts.
Valeo is also exposed to the risk of liability claims for damages
caused by defective products sold or services rendered by
the Group. To protect itself against this risk, Valeo has taken
out an insurance policy to cover the financial impact of these
claims. However, it is uncertain whether this insurance policy
would be adequate to cover the full financial impact of such
claims.
Lastly, Valeo is exposed to the risk of being sued by
its customers for failure to comply with contractual
commitments, which result from their demands regarding
operational performance, such as management excellence in
development and industrialization projects, the ability to meet
demand in terms of volumes, and absolute control of logistics
operations in all circumstances. The Quality function and its
Project Quality network, as well as the Purchasing, Industrial
and Logistics functions, are responsible for managing these
risks.
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