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2.7 Management report on the Group Expected developments and and associated opportunities and and risks risks Pages 106–108 Pages 106–108 For the accounting process at ThyssenKrupp this means that implemented controls adequately ensure that despite any risks the consolidated financial statements comply with the requirements. Various integrated and independent supervision measures are in place to help achieve this aim. Our consolidated financial statements are prepared on the basis of a standard accounting policy which is regularly updated and made available to all relevant employees via an internal internet platform. A specially developed consolidation tool based on standard software is used, which ensures a uniform procedure and minimizes the risk of false statements in the Group’s financial accounting and external reporting. Financial reporting is organized in clearly defined sub-processes. Clear-cut responsibilities in line with the principle of segregating functions and the dual-control principle reduce the risk of fraudulent conduct. As the department responsible for the preparation of the consolidated financial statements, Corporate Center Accounting and Financial Reporting issues the decentralized units with binding standards for content and scheduling so as to safeguard the consistency of accounting practices in the Group and minimize scope for discretion in connection with the recognition, measurement and statement of assets and liabilities. In some cases individual decentralized units use the Group’s shared service centers to prepare their local financial statements. Service center employees and all other employees involved in the accounting process undergo regular training and receive support. We control and monitor the relevant IT systems used in the consolidation process on a centralized basis and perform regular system backups to reduce the risk of data loss and system failure. Automatic controls and manual checks by experienced employees as well as custom authorizations and access controls are part of a security system designed to protect finance systems against misuse. Corporate Center Internal Auditing is also involved in the overall process in that it regularly checks the efficiency of the internal control and risk management system in the accounting processes. The overall package of processes, systems and controls provides sufficient guarantee that the Group accounting process is carried out reliably and in compliance with IFRS, German GAAP (HGB) and other standards and laws of relevance to accounting. Utilizing opportunities and simultaneously managing risks When we see and wish to utilize appropriate opportunities in connection with our strategic decisions, we take risks responsibly in compliance with the requirements of the risk principles and make the necessary provision to cover risks. Details of how we systematically identify, evaluate, manage and control opportunities are presented in our opportunity report. 110
Management report on the Group 2.7 Management report on the Group Expected developments and associated opportunities and risks 110 | 111 Risk transfer by central service provider As central service provider, ThyssenKrupp Risk and Insurance Services again handled the Groupwide transfer of risks to insurers in 2010/2011. The scope and structure of insurance cover is determined on the basis of risk assessments in which insurable risks at the Group companies are identified, evaluated and reduced or removed through asset-specific protection plans. Depending on the Group’s risk-bearing ability, we agree appropriate deductibles for individual classes of insurance. To keep risk prevention at a sustainable and appropriately high level, binding standards are in place for all Group companies. These standards were developed by experts from all areas of the Group under the leadership of ThyssenKrupp Risk and Insurance Services and are updated on an ongoing basis. Internal and external auditors regularly check compliance with these standards. To limit the risk of insurer insolvency, we spread the risk over numerous insurers taking into account the ratings given to these insurers by recognized agencies. Financial risks Central responsibilities of ThyssenKrupp AG as parent company include the coordination and management of financial requirements within the Group and securing the financial independence of the Company as a whole. To this end we optimize Group financing and limit the financial risks. Risks in the individual financial risk areas are minimized through an ongoing process of monitoring and intensive controls. Credit risk (default risk): We enter into financial instrument transactions in the financing area only with counterparties who have a very high credit standing and/or are covered by a deposit guarantee fund. Transactions are concluded only within specified counterparty risk limits. Outstanding receivables and default risks in connection with supplies and services are constantly monitored by the Group companies; in some cases they are additionally insured under commercial credit policies. The credit standing of key account customers is monitored particularly closely. Liquidity risk: To secure the solvency and financial flexibility of the Group at all times, we maintain longterm credit facilities and cash funds on the basis of a multi-year financial planning system and a liquidity planning system on a rolling monthly basis. The cash pooling system and external financings are concentrated mainly on ThyssenKrupp AG and specific financing companies. We use the cash pooling system to allocate resources to Group companies internally according to requirements. Market risk: Various measures are used to mitigate or eliminate the risk of fluctuations in the fair values or future cash flows from non-derivative or derivative financial instruments due to market changes. These mainly include off-exchange-traded foreign currency forward contracts, interest-rate swaps, interestrate/foreign currency derivatives and commodity forward contracts with banks and commercial partners. To hedge against commodity price risks we also use exchange-traded futures. The use of derivative financial instruments is extensively monitored, with checks being carried out on the basis of policies in the framework of regular reporting.
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Annual Report 2010/2011 At the cent
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Our mission statement We are Thysse
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Our capabilities Material We combin
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Making tomorrow possible Our engine
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Letter to shareholders Dr.-Ing. Hei
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Letter to shareholders To assist ou
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Contents Our mission statement C2 F
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