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Risk Report
conSoliDateD MANAGEMENT REPORT / PERFORMANCE OF PALFINGER
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Risk Report
PALFINGER is aware of the fact that a functioning opportunities and risk management system plays
an important role in maintaining and expanding competitive advantages. The aim is to use a systematic
approach to identify opportunities and risks at an early stage so as to be able to proactively
respond to changing framework conditions.
The basic components of the risk management set up by the PALFINGER Group are standardized
Group-wide planning and controlling processes and inter-company guidelines and reporting
systems. The risk management process is described and set forth in a Group guideline. The viability
and effectiveness of the process are checked and scrutinized at regular intervals.
The direct responsibility for risk management lies with the head of each operating unit. This is the
level at which any issues pertaining to risks are regularly noted and evaluated. The corporate risk
management reports directly to the Management Board, which bears overall responsibility.
Standardized risk management
takes into account opportunities
and risks.
Risk management system
The management of the individual corporate areas and business units periodically identifies and
evaluates the most important opportunities and risks along the process chain, also taking external
factors into consideration. The evaluation is carried out with a view to their possible impacts and
their probability of occurrence and uses a clearly structured and Group-wide uniform method. On
the basis of this analysis, existing measures are documented and further measures for active risk
control are developed and implemented. The corporate risk management department also carries
out periodic checks in order to make sure that the planned measures are implemented within the
set deadlines.
The internal auditing department monitors adherence to the relevant statutory provisions and the
Group’s internal guidelines. It also examines the general functionality of the risk management
system with respect to the early identification of risks that might jeopardize the continued existence
of the Company. Short-term risk issues are covered by the monthly reporting in controlling and by
periodic meetings of the steering committees of the business divisions.
Risk issues
The current risk exposure of the PALFINGER Group is strongly influenced by developments in the
market. In the 2011 financial year, market demand was on the increase, even though this trend
became significantly weaker in the second half of the year. PALFINGER was able to utilize a large
part of existing capacities. Should the trend of recent months continue and market demand drop
further, PALFINGER will have to adjust its fixed-cost structure. The volatility of the markets is one of
today’s biggest challenges. Hence, the flexible and lean processes in place at PALFINGER constitute a
significant competitive advantage over the Company’s competitors.
Under its Group-wide risk management system, PALFINGER AG divides its risk areas into
four main categories:
• External risks
• Strategic risks
• Internal risks relating to value creation
• Internal risks relating to supporting processes
70 palfinger Annual Report 2011