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METRO GROUP : ANNUAL REPORT 2010 : BUSINESS → GROUP MANAGEMENT REPORT : 10. ACCOUNTING-RELATEd INTERNAL MONITORING ANd RISK MANAGEMENT SySTEM Based on the described principles, the Internal Audit department carries out individual audits of the controls governing the process of preparing the consolidated financial statements, the implementation of the IFRS accounting guideline and Group accounting processes within METRO GROUP. In the process, focal topics are defined as part of risk-orientated planning for the annual audit. External audit The IFRS accounting guideline is reviewed by the auditor of the consolidated financial statements and made available to the auditors of the companies included in the consolidated financial statements. These, in turn, confirm the consistent → p. 128 application of the IFRS accounting guideline by the companies included in the consolidated financial statements. In addition, the individual IFRS financial statements prepared by the Group companies for consolidation purposes and the consolidated financial statements of METRO AG are reviewed and monitored for compliance with applicable accounting regulations by the respective auditors. The interim consolidated financial statements for the six-month period undergo an auditor’s review and the full-year consolidated financial statements are audited. The final auditor’s opinion on the consolidated financial statements is published in the Annual Report.
METRO GROUP : ANNUAL REPORT 2010 : BUSINESS → GROUP MANAGEMENT REPORT : 11. RISK REPORT 11. Risk report Risk management at METRO GROUP is an integral part of value-orientated business management. It helps the Company’s management to limit risk and exploit opportunities and is based on a systematic process of risk identification, assessment and control for the entire Group. Risks are internal or external events that can negatively impact the realisation of short-term objectives or the implementation of long-term strategies. They can also emerge from missed or poorly exploited opportunities. we define opportunities as possible successes that extend beyond the defined objectives. within the framework of risk management, we recognise unfavourable developments at an early stage and put the necessary countermeasures into place. In addition, we also systematically identify, assess and seize positive Groupwide opportunities. Centralised management and efficient organisation METRO GROUP’s risk management officer continuously and promptly informs the Management Board of METRO AG of important developments in risk management. Based on an annual Group-wide risk audit, the risk management officer writes the risk report. The most critical responsibilities of central risk management include ensuring the Group-wide exchange of information on risk-relevant issues and developing risk management in all sales divisions and Group units. This involves coordinating the Group-wide recording and systematic assessment of all essential risks according to uniform standards. The risk management officer compiles the results in a risk portfolio that provides the basis for determining METRO GROUP’s total risk and opportunities situation. Group-wide risk management tasks and responsibility for risk management are clearly regulated and mirror METRO GROUP’s corporate structure. This combines centralised management by the management holding company METRO AG with the decentralised operating responsibility of the individual sales divisions. The sales divisions and consolidated subsidiaries are thus responsible for the risks, in particular operating risks. They oversee risk management, while METRO AG supervises its implementation. The Supervisory Board and its Accounting and Audit Committee work intensely on risk management. EBIT after Cost of Capital (EBITaC) as a risk assessment metric → p. 129 The value contribution, which we calculate as EBITaC (EBIT after Cost of Capital), is a key benchmark for corporate success. This represents EBIT including special items from Shape 2012 periodised over four years less the costs of capital. The degree of readiness to assume risk also focuses on this key metric and thus follows the principle of sustainably increasing enterprise value. In principle, METRO GROUP takes entrepreneurial risks only if they are manageable and if the opportunities involved promise reasonable value added. Strict risk policy principles Risks incurred in conjunction with the core processes of wholesale and retail trading are borne by METRO GROUP. The core processes include the development and implementation of business models, decisions on store locations, the procurement and sale of merchandise and services, human resources development relating to specialists and managers, as well as liquidity protection. In principle, we do not assume risks that are not related to these core processes or support processes. Clearly defined risk management details The coordinated application of risk management tools is assured by the compilation of all relevant facts in guidelines. These include the Articles of Association and by-laws of Group companies, internal Group procedures and the risk management manual of METRO AG that provides information on how the risk management system works, offers a comprehensive overview of potential risk areas, assigns responsibility for monitoring and provides instructions on how to act. The risk management manual is continuously reviewed and updated. Risks, as well as opportunities, are identified in a bottom-up process that extends through all management levels. An early-warning system assesses business risks in terms of scope for a planning period fixed at three years. Group reporting promotes internal risk communication Group reporting is the central vehicle for internal risk communication. It is complemented by risk management reporting. The aim is to allow for the structured and continuous
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