ZaraAnnual-Arabic2009

26. RISK MANAGEMENT
Interest rate risk
The Group is exposed to interest rate risk on its interest bearing assets and liabilities (bank deposits,
overdrafts, and loans).
The following table demonstrates the sensitivity of the income statement to reasonably possible changes
in interest rates with all other variables held constant.
The sensitivity of the income statement is the effect of the assumed changes in interest rates on the
Group’s profit for one year, based on financial assets and liabilities bearing floating interest rates.
Equity price risk
The following table demonstrates the sensitivity of the income statement and the cumulative change in
fair value to reasonably possible changes in equity prices with all other variables held constant.
2009 2008
Change in
equity price
Effect on
profit of the
year
Effect on
equity
Change in
equity price
Effect on
profit of the
year
Effect on
Equity
% JD JD % JD JD
Amman Stock Exchange 10 - 2,307,103 10 - 2,171,813
2009 Increase in basis points Effect on Profit for the year
JD
JD 75 (410,266)
USD 75 (245,593)
Decrease in basis points
JD 50 273,510
USD 50 163,729
Effect on Profit for the year
JD
2008 Increase in basis points Effect on Profit for the year
JD
The effect of decreases in equity prices is expected to be equal and opposite to the effect of the increases
shown.
Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and
cause the other party to incur a financial loss. The Group is exposed to credit risk on its bank balances,
receivables and certain other assets as reflected in the balance sheet.
The Group seeks to limit its credit risk with respect to banks by only dealing with reputable banks and
with respect to customers by setting credit limits for individual customers and monitoring outstanding
receivables.
The Group provides services to a large number of customers. No single customer accounts for more than
10% of outstanding accounts receivable at 31 December 2009.
JD 75 (234,204)
USD 75 (191,079)
Decrease in basis points
JD 50 156,135
USD 50 127,386
Effect on Profit for the year
JD
70 Consolidated Financial Statement Annual Report 2009
71