Annual Report 2010 - Knorr-Bremse AG.

MANAGEMENT REPORT
33
Operational risks
Risks due to production downtimes are covered by commercially
appropriate insurance contracts. Flexible working
time models enable unexpected short-term shifts in
capacity requirements to be accommodated efficiently.
Knorr-Bremse maintains a close working relationship with
many suppliers and service providers. In order to avoid delivery
delays or quality defects, which in turn could lead to
lost production time and have a negative impact on earnings,
Knorr-Bremse attaches great importance to careful
supplier selection procedures. Suppliers are also continuously
subjected to technical and commercial audits.
Exchange rate risk is not of crucial importance for the
Knorr-Bremse Group because geographic diversification
over recent years has enabled the Group to establish a
high proportion of local manufacturing and local suppliers
within the respective currency zones. In order to limit the
residual exchange rate risk related to transactions across
different currency zones, Knorr-Bremse is increasingly
identifying opportunities to exploit compensatory supply
volumes within the Group. In selected cases, currency risks
are also hedged by means of derivatives. Such measures,
however, serve exclusively to hedge underlying transactions
within the scope of normal business operations.
The basis for managing foreign exchange risks is provided
by the Knorr-Bremse Guidelines on Managing Currency Exposure,
which set out the procedures to be followed and
the necessary scope of hedging transactions in binding
form for all Group companies. The monitoring of compliance
with these Guidelines is part of the relevant Knorr
Excellence process. The risk of fluctuations in commodity
prices that are of relevance to Knorr-Bremse is also hedged
by means of derivatives, in so far as such fluctuations could
have a substantial impact on the Group‘s profitability. This
is the case with steel and aluminum.
order to avoid malfunctions, Knorr-Bremse attaches great
importance to harmonization of the hardware and software
architecture, the integrity and security of existing
data, appropriate back-up solutions, and careful management
of access control. Compliance with the IT Security
Guidelines is comprehensively monitored with the aid of
internal and external audits at all major sites around the
world. The Corporate Data Center in Munich, Germany,
meets the very highest requirements (industry standard) in
terms of efficiency, reliability, and security. Based on this
platform, the necessary global transparency and the integration
of all corporate sites – and of recent additions in
particular – are being further enhanced.
In response to increasingly stringent environmental requirements,
Knorr-Bremse has aligned its activities with
the international standard ISO 14001. The majority of the
company’s sites have already been certified or recertified
accordingly.
In Asia, as well as in the other regions, imitation and counterfeit
products remain a serious threat to business in the
commercial vehicle and rail vehicle sectors. The most effective
countermeasure to this threat is Knorr-Bremse’s
technical expertise, which on account of the safety-critical
applications of its products is both recognized and appreciated
by customers around the world.
Careful analysis of the Group-wide risk profile has revealed
that no identifiable risks exist that would threaten the survival
of the company or have a substantial impact on its
assets, financial status or profitability. Nor are any such risks
currently expected to arise in the future.
Business processes within the Knorr-Bremse Group are
supported by powerful and state-of-the-art IT systems. In