annual report - Kendrion

(r)
>> Financial risk management
The Group has exposure to the following risks from its use of financial instruments:
z credit risk;
z
z
liquidity risk;
market risk.
This section provides general information about the Group’s exposure to each of the above risks in the course of its normal business operations,
the Group’s objectives, policies and processes for measuring and managing risk, and the Group’s management of capital. Further quantitative
disclosures are concluded in the financial instrument section in these consolidated financial statements.
The Executive Board bears the ultimate responsibility for the organisation and control of the Group’s risk management framework. The Group’s risk
policy is designed to identify and analyse the risks confronting the Group, implement appropriate risk limits and control measures, and monitor the
risks and compliance with the limits. The risk management policy and systems are evaluated at regular intervals and, when necessary, adapted
to accommodate changes in market conditions and the Group’s operations.
The Company’s Supervisory Board supervises compliance with the Group’s risk management policy and procedures.
For a more detailed description of risk management and the position of financial risk management in the Group’s framework, we refer to the Annual
Report.
(i)
Credit risk
Credit risk is the risk of financial loss to the Group in the event that a client or counterparty to a financial instrument fails to meet its contractual
obligations. Credit risks arise primarily from accounts receivable, derivative transactions concluded with banks and cash positions and deposits
held with banks. The Group continually monitors the credit risk within the Group. The Group does normally not require collateral for trade and other
receivables and financial assets.
The credit policy includes an assessment of the creditworthiness of every new major client before offering payment and delivery terms.
This assessment includes external credit ratings or reports if they are available. The creditworthiness of major clients is actively monitored
on an ongoing basis.
The Group recognises impairment provisions of an amount equal to the estimated losses on trade and other receivables and other investments.
The main component of this provision comprises specific provisions for losses on individual accounts of material significance.
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annual report 2011