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METRO GROUP : ANNUAL REPORT 2010 : BUSINESS
→ GROUP MANAGEMENT REPORT : 11. RISK REPORT
monitoring of risks and document this in line with legal stipulations.
In addition, it is also tasked with communicating
possible risks to the relevant responsible persons.
As a matter of principle, all METRO GROUP companies conduct
an annual risk inventory as per 30 June of each year. In
the process, individual risks are described and assessed
based on fixed indicators. The management of the sales divisions
and the cross-divisional service companies report
their risk inventory to the risk officer of METRO AG. In addition,
they receive a list of all risks in their areas of responsibility.
The process concludes with METRO AG’s risk officer
summing up the notifications from the central departments
and companies and presenting the entire risk portfolio of
METRO AG to the Management Board.
An emergency notification system takes effect in case of
sudden serious risks to the asset, financial and earnings
position of METRO GROUP. In this case, the Management
Board of METRO AG directly and promptly receives the necessary
information.
Consistent risk monitoring
All of our managers are responsible for overseeing the implementation
and effectiveness of risk management in their particular
area. Risk management officers ensure that the risk
management system as a whole is operational and that the
standards and processes remain current. In compliance with
the provisions of KonTraG (the German Control and Transparency
Law), external auditors submit our early-detection
system to a periodic review. The results of this review are
presented to the Management Board and Supervisory Board.
Opportunity identification
The timely recognition and exploitation of opportunities is a
critical entrepreneurial duty and secures long-term success.
METRO GROUP views risk and opportunity management as
two distinct responsibilities. Ascertaining and communicating
opportunities are an integral part of the management
and controlling systems between the consolidated subsidiaries
and the holding company. It is the responsibility of the
management of the sales divisions, cross-divisional service
companies and the central holding units to identify, analyse
and exploit operating opportunities. The individual management
groups examine detailed market and competition analyses,
market scenarios, the relevant cost drivers and critical
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success factors, including those in the Company’s political
environment. In addition to these responsibilities, the possible
opportunities for cost savings, sales growth and earnings
increases have been identified as part of Shape 2012. we
record these opportunities by means of a comprehensive
reporting system. details of the reporting system can be
found in the chapter Strategy – Shape 2012 on pages 36 to
42. In the supplementary and forecast report on pages 134 to
142, we describe the opportunities that we expect to have in
future years.
Presentation of the risk situation
METRO GROUP primarily faces the internal and external
risks that are described in the following section.
Business and sector risks
As an international company, METRO GROUP is dependent on
the development of the world economy. Overall, the world
economy was able to continue to recover from the economic
and financial crisis in 2010. however, the economic upswing is
progressing at varying speeds. Particularly in Europe, many
countries are burdened by high public debt. For this reason,
Europe is experiencing divergent growth in private consumption.
despite persistent economic risks, the economic situation
in the countries we operate in has improved. The risks
concerning the short- and medium-term development of the
retail sector and thus METRO GROUP fell slightly compared
with last year. Overall, the retail and wholesale trade is less
sensitive to changes in the economic situation than other sectors.
we are determined to continue to strengthen our position
as a leading international retail and wholesale group,
especially in the growth regions of Asia and Eastern Europe.
Retail business
The particularly intense competition in the German and
western European retail sector creates conditions that
could influence business developments and represent natural
business risks. A fundamental business risk is consumers’
fluctuating propensity to consume, a factor that depends
on numerous economic, political and social parameters.
Over the course of economic recovery, customers’ propensity
to consume has recovered slightly in many countries.
however, austerity measures aimed at reducing public debt,
particularly in Europe, have placed additional burdens on
private consumption. Overall, we expect spending on both
consumer staples and such larger purchases as household
appliances and consumer electronics to increase.