Management Report and Consolidated Financial ... - Do & Co

GB Zahlenteil Neu 7 Englisch:Layout 1 16.10.2008 8:58 Uhr Seite 128
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Integral part of
management
Further consolidation
within airline sector
RISK MANAGEMENT
DO & CO is exposed to widely varying risks because it conducts business globally
in three different segments: Airline Catering, International Event Catering und Restaurants,
Lounges & Hotel.
DO & CO views risk management as an essential instrument of company management.
Risk management has two aims. The first is to safeguard the assets and financial
and earnings position of the company and its existing and future potential for profit
and growth; the second, to respond to changing conditions promptly.
The risk management system is based on standardized group-wide planning and control
processes and company-wide guidelines and reporting systems.
Risk management at DO & CO is permanently integrated in the organizational structure
and processes and is handled by management in the business units. In other
words, risk management is an integral part of all business processes and helps keep
risk identification quick and response times short. Employees become involved in this
process when local managers carry out risk management tasks.
The Group reviews its risk situation annually. The managers of the business segments
and business units identify and document the essential opportunities and risks all
along the business processes, taking external factors into account. These subjects are
discussed and evaluated in several management meetings. The identified risks are
grouped into risk fields and assigned to the managers responsible for the given area
for further action. Strategies for coping with the identified risks are then devised and
subsequently implemented by local management. The aim is to reduce possible damage
and minimize the probability of risks occurring. Possible interdependencies of
opportunities and risks are considered in the process.
The principle of diversification plays a significant role. The Group conducts business
worldwide in three different divisions, thus alleviating specific threats in individual
markets. Consequently, the unique business model of DO & CO has additional mechanisms
to compensate for risks.
The following risk fields were identified as material for the business year 2007/2008:
Risks and Trends Specific to the Airline Industry
The airline industry is heavily dependent on how the various markets fare economically.
The market adjustments in this industry consisting largely of state-owned European
carriers are not yet complete. Cost pressures have mounted considerably with the
sharp increases in fuel prices. Against the backdrop of flagging economic activities,
the market is sure to undergo further consolidation and adjustment. A similar trend is
expected among the so-called “low cost” carriers. There will be an increasing move
towards alliances and takeovers.
Airline Catering stays in close contact with its most important customers through professional
key account management, allowing it to respond early on to any negative
trends on the customer side. To lessen dependence on a handful of big accounts, the
division participates in tenders throughout the world as part of its ongoing efforts to
add new customers.