2007 Interactive Registration Document - Renault

Industrial risk
The decision to set up industrial bases in countries outside Europe was taken
as part of a growth strategy that factors the risks of instability into an overall
industrial approach.
The Group also seeks to continually increase local content in its emergingcountry
production units. The aim is to make these units more competitive in
their local markets and to use their capacity more effi ciently, exporting to other
areas when domestic markets falter and where exchange-rate changes improve
the price competitiveness of products outside the country.
In Iran, Renault’s investments are guaranteed by a credit insurer.
Commercial risk
The Group hedges all financial flows arising from commercial activities
in emerging countries. The two main hedging instruments used are bank
guarantees (Standby Letters of Credit from leading banks) and short-term export
credit guarantees (global/commercial/political cover from Coface).
ACTIONS AND IMPROVEMENTS
Country risk premium
Geographical risks are taken into account by demanding a higher rate of return
from any new investment project in an emerging country. The risk premium
added to the standard rate of return is determined from fi nancial market and
macroeconomic indicators.
Short-term liquidity risk
A trend indicator is used to monitor risk, including liquidity risk, in the countries
where the Group operates. By tracking this indicator, the Group can adjust the
fi nancing policy applied to its subsidiaries in the light of changes to the situation
in each country and available macroeconomic data.
Intra-group financial flows
To support its global growth, the Group has designed a radial fi nancial scheme
and “hub and spoke” invoicing system. It thus centralizes its fi nancial-risk
management activities and can use a single hedging procedure on competitive
terms. The industrial subsidiaries sell their export production to Renault s.a.s.,
which on-sells it to the importing subsidiaries and independent importers by
granting them supplier credit. The parent company manages the risk associated
with this credit.
Risk management and the Regional Management
Committees
Overall country risk is monitored by each Regional Management Committee. The
Committees may ask for the general rule to be waived, in which case approval
will be required from the Group Executive Committee.
✦ Global Reporting Initiative (GRI) Directives
2.3.1.2 PRODUCT QUALITY RISK
MANAGEMENT REPORT 02
RISK MANAGEMENT
RISK FACTORS
Developments in the automotive industry are characterized by the emergence
of systems with increasingly sophisticated technologies. This applies not just
to active safety (power steering and braking, etc.) and passive safety (restraint
systems, etc.) but to most of the systems used in modern automobiles.
This trend is refl ected in the rapid increase in automated systems commanded
by onboard electronics. Signifi cantly, drivers now have less and less direct
responsibility for operating these systems.
MANAGEMENT PROCEDURES
When a new vehicle is designed, Renault sets up a system to identify, assess
and control risks created by the equipment it installs:
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this system includes a specifi c organization for controlling risks, defi ning and
ensuring compliance with standards, and methods and tools for operational
safety;
it extends to the phases of manufacturing, vehicle delivery, maintenance –
repair and end-of-life.
The incident handling system has also been improved through:
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faster detection of incidents so that they can be brought to the attention of
the appropriate functional experts as quickly as possible;
closer proximity between the incident-detection and impact-analysis
functions, thereby improving conditions for making assessments and taking
corrective measures;
formal rules for dealing with incidents and recall campaigns.
The “Vigilance Committee”, chaired by the Quality Department, sees that
measures for detecting, preventing and handling incidents are properly
carried out.
Renault has set up an organization to limit the number of incident-exposed
vehicles. The severity and safety impact of any incidents are assessed and
the risk is dealt with as quickly as possible, notably in the event of a recall
campaign.
The organization with regard to regulations has also been improved in order
to be more effi cient in:
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identifying new regulations that must be taken into account right from the
design phase;
ensuring that products comply with regulations.
ACTIONS AND IMPROVEMENTS
Renault has developed new quality and operational safety initiatives for its
products.
It has joined with other carmakers, government authorities and standardization
organizations in an effort to fi nd common standards for defi ning and assessing
risks.
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Registration Document Renault 2007 67