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METRO GROUP : ANNUAL REPORT 2010 : BUSINESS → GROUP MANAGEMENT REPORT : 11. RISK REPORT METRO GROUP to further strengthen its Internet sales channel so it does not leave competitors any room to gain market share. For this reason, we are tirelessly working to expand and improve our sales divisions’ online presences. An important factor for the success of Internet retail is fulfilling logistics and IT requirements to guarantee fast, dependable deliveriesaswellasensuringsecureandeasyorderingprocedures. At the same time, it is important to dovetail stationary business optimally with Internet retail. Risks related to business performance Suppliers As a retail and wholesale company, METRO GROUP depends on external providers for the supply of goods and services. we place a high priority on both the quality of the supplied goods as well as on the reliability of our suppliers. defective or unsafe products would cause extensive damage to the image of METRO GROUP and pose a long-range threat to the Company’s success. For this reason, we select our suppliers carefully. They are continuously monitored and have to adhere to the procurement policy standards of METRO GROUP. In particular, these standards include those tested by the Global Food Safety Initiative like the International Food Standard and the GLOBALGAP certification for agricultural products. They help to ensure the safety of foods on all cultivation, production and sales levels. To prevent disruptions in the supply of goods and to avoid becoming dependent on individual companies, we work with a variety of suppliers. By taking this approach, we ensure that the desired product is practically always in stock and, in the process, achieve high levels of customer satisfaction. The success of METRO GROUP also depends heavily on the procurement prices of the products offered for sale. Our purchasing volume in the numerous countries where we do business has a major impact on procurement prices. Just like all other retail and wholesale companies, though, we constantly face the risk that shortages of resources could occur and drive up the prices of raw materials and foods. For instance, increased oil prices can lead to higher procurement prices for a variety of products. IT and logistics The highly diverse selection of goods in bricks-and-mortar retailing and the high stock turnover entail fundamental organisational, IT and logistics risks. METRO GROUP’s international focus and concentration on national, regional and local product assortments add to these risks. Any dis- → p. 132 ruptions in the supply chain, for example in the supply of goods, could lead to business interruptions. we reduce our dependency on individual suppliers and service providers by expanding our circle of business partners and employing the principle of efficient assignment of responsibilities. Because important business processes, including product ordering and sales, use IT systems, continuous availability of the infrastructure is also a critical factor. For this reason, systems that are essential to business operations are largely selfcontained and can always be used even during events such as network failures. The same is particularly true for the checkout systems in stores and locations. working hand in hand with computing centres, efficient and secure networks ensure that major system failures caused by such events as natural disasters or criminal acts can be overcome. In our work on IT security, we also ensure a high quality of the processed data. These data may be viewed only by authorised staff. The necessary user accounts and access authorisations are administered according to a predefined planning process. The core processes and systems of METRO SySTEMS are checked by external inspectors and also by a department of Internal Audit that specialises in IT auditing procedures. Human resources risks The expertise, dedication and motivation of our employees are key success factors that have a decisive impact on our competitive position. One prerequisite to achieving strategic goals are highly qualified experts and managers. It is an ongoing challenge to recruit and retain such valuable employees for the Group, in particular in the face of demographic change and intense competition for the best people. This makes in-house qualification measures indispensable. To foster the requisite entrepreneurial skills among our employees, we optimise training and professional development programmes for employees at all levels. Training courses and systematic measures that help employees to grow in professional terms promote entrepreneurial thinking and actions among employees. variable and performance-based pay components serve as an incentive. direct participation in business success increases employees’ identification with METRO GROUP and enhances their awareness of risks and opportunities in all entrepreneurial decisions. More information on METRO GROUP’s human resources policy can be found in the chapter Employees on pages 96 to 102.
METRO GROUP : ANNUAL REPORT 2010 : BUSINESS → GROUP MANAGEMENT REPORT : 11. RISK REPORT Legal risks, tax risks Legal risks arise primarily from labour and civil law cases. In addition, risks for METRO GROUP may arise from preliminary investigations, for example in the context of possible infringements of cartel or competition law. Tax risks are mainly connected to external audits. Financial risks The financial department of METRO AG manages the financial risks of METRO GROUP. Financial risks include liquidity risks, price risks, creditworthiness risks and risks arising from cash flow fluctuations. These risks and their management are described in the notes to the consolidated financial statements in no. 43 “Management of financial risks”. Overall assessment of the risk situation by the Company’s management The Management Board, the Supervisory Board and other important bodies of METRO AG are regularly informed about → p. 133 the Company’s risk situation. Overall, the risk situation of METRO GROUP has improved since the Annual Report was issued last year, primarily as a result of economic conditions. To evaluate the present risk situation, risks were not only examined in isolation: the interdependencies between risks were analysed and rated according to their probability. The assessment has shown that the overall risks are manageable. There are no potentially ruinous risks for the Company and no risks can be identified that could endanger the Company’s future existence. The Management Board of METRO AG currently does not expect any fundamental change in the risk situation. In its business strategy, METRO GROUP considers potential opportunities. The opportunities that the Company sees for future years are addressed in the supplementary and forecast report on pages 134 to 142.
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