Annual Report 2011 (5.07 MB, PDF-File) - Oerlikon

change and interest rate risks), Group Tax (tax risks), Group
Legal Services (legal risks, including trade control), Group
Compliance (compliance risks), IT Security (IT risks), Safety and
Security (safety and security risks), Insurance Management (insurable
risks), etc.
Culture
Shaping the risk culture at Oerlikon are the Code of Conduct,
training, best-practice sharing, continuous implementation of
risk management processes and the role model functions of the
Executive Committee and senior management. Moreover, statements
illustrating the desired risk culture are part of the risk management
directive.
Current situation
Oerlikon does business in markets characterized by different
risks and uncertainties. The Segments and Business Units
have different risk profiles that are contingent upon strategy,
business model and operative implementation. From the perspective
of the Group’s holding company, the following risks
might impact Oerlikon’s businesses and its performance.
Market risks
Economic slowdown and business cycles: The deterioration
of the macroeconomic environment in Europe (sovereigndebt
and euro crisis) and around the world, as well as business
cycles in various markets could cause demand to decline.
As a result, order intake, sales and profitability could
decrease.
Competition: competition and overcapacities in various markets
could exert pressure on prices or trigger a decline in orders.
This could cause order intake, sales and profitability to
decrease.
Foreign-currency effects (transaction and translation risk):
Unfavorable currency developments, mainly with respect to
the euro and US dollar, could trigger higher procurement
costs and lower sales figures. In addition, profitability could
decline as local currencies are translated into the Group’s reporting
currency (Swiss franc).
Technology risks: When technologies do not prove successful
in the market, orderintake and sales targets may not be
reached. Impairment charges may have to be taken.
Country risks: for example, new or higher taxes and fees, currency
appreciation or depreciation, higher interest rates, slowed
growth, loss of proprietary information (intellectual property) ,
etc. could cause sales to decline and costs to rise, resulting in
decreased profitability.
Credit risks
Credit risks result when customers cannot meet their obligations
as agreed. At present, there are no significant credit risks
for the Group.
85
Operational risks
Additional costs/warranties: insufficient product quality or
machines and equipment that fail to perform as promised
could lead to additional costs (contractual warranty obligations).
This could reduce profitability.
Legal risks: Oerlikon is exposed to numerous legal risks as a
result of international operations. These include, in particular,
risks in the areas of competition and antitrust law, patent law,
tax law and environmental protection. Oerlikon has a valuable
portfolio of industrial property rights, such as patents and
trademarks. These property rights can become the target of
attacks and infringements.
Loss of key people/shortage of qualified skilled workers and
lack of qualified managers: When key people leave the company
and qualified workers and managers are not available,
sales and profitability targets may not be reached.
Further information regarding risk management, see page 66,
section 6.0 Corporate Governance, page 118 et seq., Notes
18–20 to the consolidated financial statements and page 141,
Note 19, to the financial statements of OC Oerlikon Corporation
AG, Pfäffikon.