Connect - Schneider Electric
Connect - Schneider Electric
Connect - Schneider Electric
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1 DESCRIPTION OF THE GROUP, AND ITS STRATEGY, MARKETS AND BUSINESSES<br />
RISK FACTORS<br />
<strong>Schneider</strong> <strong>Electric</strong> was also among 2,000 companies based all<br />
over the world that were mentioned in the Volcker report on the<br />
Oil for Food programme published by the UN in October 2005.<br />
It was investigated by the French judicial system in 2010 with<br />
regard to this report, which stated that the Group had entered into<br />
agreements with Iraqi government between 2000 and 2004, under<br />
which surcharge payments are alleged to have been made to the<br />
Iraqi government of around USD450,000, violating the provisions of<br />
the embargo in force at that time.<br />
Various other claims, administrative notices and legal proceedings<br />
have been fi led against the Group concerning such issues as<br />
contractual demands, counterfeiting, risk of bodily harm linked to<br />
asbestos in certain products and work contracts.<br />
Insurance<br />
<strong>Schneider</strong> <strong>Electric</strong>’s strategy for managing insurable risks is<br />
designed to defend the interests of employees and customers and<br />
to protect the Company’s assets, the environment, employees,<br />
customers and its shareholders’ investment.<br />
This strategy entails:<br />
• identifying and quantifying the main areas of risk;<br />
• preventing risks and protecting industrial equipment; having<br />
audits carried out at critical industrial sites by an independent<br />
prevention company, self-evaluation of risks for the other<br />
Group sites;<br />
• organising and deploying business continuity plans and crisis<br />
management resources, notably for health risks such as<br />
pandemics, technical and political risks and natural disasters;<br />
• carrying out hazard and vulnerability studies and safety<br />
management for people and equipment;<br />
• maintaining the necessary insurance cover for the main risks<br />
facing Group companies under global programs. The Group<br />
carefully screens insurance and reinsurance companies and<br />
evaluates their solvency.<br />
In addition, the Group has taken out specifi c cover in response to<br />
certain local conditions, regulations or the requirements of certain<br />
risks, projects and businesses. To extend guarantees and reduce<br />
budgets, the Group coordinates purchasing of local cover.<br />
Liability insurance<br />
The integrated global liability insurance plan set up in 2007 was<br />
continued until December 31, 2011. A new insurance plan was<br />
put in place on January 1, 2012 with a new lead insurer providing<br />
suitable terms and limits for the current size of the Group and the<br />
changes in its risks and agreements.<br />
Certain specifi c risks, such as aeronautic or environmental risk, are<br />
covered by specifi c programs.<br />
40 2011 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC<br />
Although it is impossible to forecast the results and/or costs of<br />
these proceedings with certainty, <strong>Schneider</strong> <strong>Electric</strong> considers that<br />
they will not, by their nature, have signifi cant effects on the Group’s<br />
business, assets, fi nancial position or profi tability. The Company<br />
is not aware of any other governmental, court or arbitration<br />
proceedings, which are pending or which threaten the Company,<br />
that are liable to have or, during the last 12 months have had, a<br />
material effect on the fi nancial position or earnings of the Company<br />
and/or the Group.<br />
Property damage and business interruption<br />
insurance<br />
The global insurance plan put in place on July 1, 2010 for an initial<br />
duration of two years has been extended until June 30, 2013. This<br />
is an “all risks except” contract which covers events that could<br />
affect <strong>Schneider</strong> <strong>Electric</strong>’s property (notably fi re, explosion, natural<br />
disaster, machinery breakdown) as well as operating losses resulting<br />
from the risks. Settlements under the global plan are capped at<br />
EUR350 million per claim and specifi c limits apply to certain risks,<br />
such as natural disasters and machinery breakdown. These limits<br />
were determined on the basis of scenarios of loss established by<br />
specialists and available capacity in the insurance sector.<br />
Assets are insured at replacement value.<br />
Shipping and transport insurance<br />
On January 1, 2009, <strong>Schneider</strong> <strong>Electric</strong> implemented a new<br />
global shipping/transport insurance program that covers all goods<br />
shipments, including between Group facilities, by all means of<br />
transport, with a maximum insured value of EUR15.2 million<br />
per convoy. This plan was continued in 2011 was renewed on<br />
January 1, 2012.<br />
Erection all risk insurance<br />
An erection all risk insurance plan was set up on April 1, 2011<br />
in order to cover the development of our services and solutions.<br />
This plan aims to provide cover for damages to work and equipment<br />
for projects taking place at our clients’ premises.<br />
Self insurance<br />
To optimise costs, <strong>Schneider</strong> <strong>Electric</strong> self-insures certain frequent<br />
risks through two captive insurance companies:<br />
• outside North America, a captive reinsurance company based in<br />
Luxembourg offers damage and civil liability coverage capped at<br />
EUR10 million per year;