Annual Report 2006/2007 KGaA/Group - BVB Aktie - Borussia ...

Borussia Dortmund
In this context, Borussia Dortmund applies the following
principles/rules of conduct:
• Management determines the basis on which
risks are to be assessed and identified.
• The identification of risks takes place in the individual
corporate divisions since that is where
knowledge about specific risks is available.
• Risks are assessed by a group of people chosen
by the management. The criteria to be applied
are also defined by management.
The governing bodies of Borussia Dortmund are kept
regularly informed of the current risk position. The
efficiency and effectiveness of the risk management
system is examined as part of the audit carried out by
the Company's auditors.
The following paragraphs describe in more detail
the specific risks to which Borussia Dortmund is
exposed, which affect the Company's business operations
as a result of internal and external factors and may
have a major influence on them over the long term.
SPECIFIC RISKS
STRATEGIC RISKS
In addition to financial success, the primary objective
of a company participating in the football business
in the Bundesliga remains sporting success, irrespective
of business plans which do not depend on
the club's position on the league table and the maintenance
of profitability in a variety of different sporting
scenarios. This can be justified solely on the
grounds of public interest, which is largely focused
on the winning of titles. If the club has no success
over longer periods, the management is faced with a
balancing act, attempting to keep the profitability of
the company and the sporting objectives in harmony
with each other. Measures which are necessary for
sporting success, such as investments, must not be
allowed to endanger the financial objectives, for
example, ensuring adequate liquidity, even over several
years. But economic success also depends to a
large extent on sporting achievements, because winning
titles generates additional demand from spectators,
business customers, sponsors and in other
areas of the business. A conflict of objectives therefore
arises. The achievement of one company objective
may therefore necessarily entail abandoning or
modifying another objective. In such cases, management
will weigh up the risks and opportunities and
attempt to find a solution that is broadly in line with
the strategic objectives from a medium-term point
of view, while remaining within the range of defined
company performance indicators in order not to
jeopardise the financial objectives.
PERSONNEL RISKS
The available potential of its employees, from both a
sporting and a financial point of view, forms the basis
for Borussia Dortmund's future development as a
business. Their ability, commitment and performance
will play a decisive role in future sporting and financial
success.
In this regard the professional squad is of critical
importance. The wrong investments in this area
would have far-reaching effects on the Company's
sporting objectives, and therefore financial objectives,
as would insufficient identification with the club
and a lack of commitment. To some extent, it may not
be possible to make up for the loss of key players as a
result of injury and, as a result, the ability to meet
internally defined objectives may be endangered.
The Company's success is based on making business
decisions and putting them into effect, and both are
largely determined by the quality of the relevant
employees. The structure of Borussia Dortmund's
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