APC 2004 Annual Report Download - page 49

47
Business Review
Certain minority shareholders filed suit. Schneider
Electric is paying the legal expenses not covered by
insurance of the former executives involved. Schneider
Electric has been named as a defendant by one of the
minority shareholders who claims that the Company is
liable for the actions of certain of the accused.
In connection with the divestment of Spie Batignolles,
Schneider Electric SA booked contingency reserves
to cover the risks associated with certain major con-
tracts and projects. Most of the risks were extin-
guished during 1997. Reserves for the remaining
risks were booked to cover management's estimate of
the risk involved.
To the best of the Company's knowledge, no other
exceptional event has occurred and no claims or liti-
gation are pending or in progress that are likely to
have a material adverse impact on the Group's busi-
ness, assets and liabilities, financial position or
results.
Insurance
Schneider Electric's strategy for managing insurable
risks is designed to defend the interests of employees
and customers and to protect the environment, the
Company's assets and its shareholders' investment.
This strategy entails:
Identifying and quantifying risk using different
reporting systems.
Preventing risks. Schneider Electric has a realistic
prevention policy to ensure safety at its sites. The
Triple A approach aims to enhance processes to con-
trol and monitor risk by identifying vulnerable areas
and implementing appropriate solutions to preserve
the long-term sustainability of the Group's manufac-
turing resources and business. This approach builds
on preventive measures already in place such as reg-
ular inspections, danger and vulnerability studies,
safety management for people and equipment and
security plans. As concerns risks of average frequen-
cy and intensity, the Group also has ongoing pro-
grams to prevent traffic accidents and work accidents
and reduce transportation risk.
Organizing and deploying crisis management
resources, notably for technical and political risks and
natural disasters.
Ensuring the necessary insurance cover. The main
risks facing Group companies (civil liability, property
damage and operating losses, environmental acci-
dents, automobile accidents and transportation risk)
are covered by global contracts with insurance and
reinsurance companies of good standing.
In addition, Schneider Electric has taken out specific
cover in response to certain local conditions, regula-
tions or the requirements of certain risks, projects and
businesses.
In order to maintain essential levels of cover while
also optimizing insurance costs in light of constraints
in the insurance and reinsurance markets, we adopt-
ed a policy of self-insuring a certain number of recur-
ring risks, whose frequency and financial impact can
be reliably estimated. These deductible management
programs mainly concern automobile, property and
casualty/business interruption and liability risks.
Although difficult conditions in the insurance and rein-
surance markets over the past three years have
reduced capacity and increased premium rates, the
Group has been able to renew all of its coverage while
stabilizing its budgets.
Liability insurance
Schneider Electric is covered by a global liability
insurance program. Specific liability programs have
been set up in the United States, Canada and Mexico
to take account of the specific requirements and char-
acteristics of the North American market. Insured val-
ues under these programs adequately cover the
Group's exposure to liability claims in connection with
its businesses.
Property and casualty / business
interruption insurance
A global property and casualty/business interruption
insurance program has been set up for Schneider
Electric in all countries except for the United States,
Canada and Mexico where a specific program has
been established to take account of the specific
requirements and characteristics of the North
American market.
Aggregate settlements under the global program are
capped at 230 million and specific limits apply to
certain risks, such as earthquake damage and
machine damage.
Transport insurance
A global transport insurance program has been set up
for Schneider Electric in all countries except for the
United States, Canada and Mexico where a specific
program has been established to take account of the
specific requirements and characteristics of the North
American market.
The program covers all goods shipments, including
between Group facilities, by all means of transport,
with a maximum insured value of 15.2 million per
convoy.