Hornbach-Baumarkt-AG Group

66 GROUP MANAGEMENT REPORT Risk Report
Risk Report
Risk management at the Group
All entrepreneurial activity directly involves opportunities and
risks. Effectively managing opportunities and risks therefore
represents a critical success factor in sustainably securing
the company’s value. The Board of Management of HORN-
BACH-Baumarkt-AG is committed to risk-conscious corporate
management which accords top priority at all times to safeguarding
the continued existence of the overall company and
its subsidiaries. The risk management system (RMS) implemented
by the Board of Management is intended to achieve
ongoing enhancements in the early identification of risks with
the aim of proactively managing such risks, as well as continuously
optimizing the company’s opportunity/risk profile. On
this basis, the Board of Management has adopted the following
principles:
Risk policy principles
The generation of economic profit necessarily involves risk
taking. Nonetheless, no action or decision may entail any
existential risk, i.e. any threat to the continued existence of
the company or any of its operations. As a matter of principle,
the Group does not enter into any risks which relate neither to
its core processes nor to its support processes. Core processes
involve developing and implementing the respective business
models, procuring merchandise and services, location decisions,
safeguarding liquidity and developing specialist and
management personnel. Any earnings risks entered into have
to be justified by an appropriate level of expected return. The
relevant key figures are based on the return on capital committed.
Risks which cannot be avoided have to be insured
against, where this is economically expedient. Residual risks
have to be controlled by means of a range of risk management
instruments.
Organization and process
The risk management system in place at the HORNBACH-
Baumarkt-AG Group forms an integral part of the company‘s
management structure. It consists of the central components
of early risk identification, controlling and planning processes,
reporting and an internal control system, and is continually
enhanced and optimized.
Responsibility for establishing, organizing and maintaining a
suitable, target-based risk management system, and the
internal control system in particular, lies with the Board of
Management. In terms of the organization and maintenance
of the system, the Board of Management is supported by the
Director of Group Controlling / Risk Management.
Risk managers at the Group’s operations in Germany and
abroad are responsible for taking suitable measures to manage
risks in their area of responsibility. When identifying and
evaluating risks and determining appropriate measures to
manage such risks, risk managers are supported by a central
risk controller responsible for coordinating risk management
processes and aggregating the risks thereby reported.
Risks are evaluated in terms of their implications and their
probability of occurrence and are allocated to so-called risk
classes in which the risks are classified as representing
“high”, “medium” or “low” risks overall. In cases where they
cannot be quantified, they are assessed in terms of their
qualitative implications. The target figures used at the Group
(including EBIT) serve as a basis for reference in this respect.
The principles and regulations underlying the risk management
system are documented in a risk management handbook.
This sets out uniform principles for the overall Group concerning
the structures and processes necessary for the early
detection of risks. To support the risk management process, a
standard software solution has been implemented across the
Group which offers assistance in recording and documenting
risks and the relevant risk management measures.
Risks are updated quarterly and reported to the Board of
Management. The Supervisory Board and Audit Committee
discuss the current risk situation on a half-yearly basis.
Alongside this scheduled reporting, ad-hoc reporting structures
are also in place and have been implemented in the risk
management process for risks arising unexpectedly.
The internal control system currently in place is based on
standardized documentation requirements at the Group for all