APC 2006 Annual Report Download - page 34

In connection with the divestment of Spie Batignolles,
the Group booked provisions to cover the risks associ-
ated with certain major contracts and projects. Most of
the risks were extinguished during 1997. Provisions
were booked for the remaining risks, based on man-
agement’s best estimate of the expected financial
impact.
The Group is not aware of any governmental, legal or
arbitration proceedings (including any such proceed-
ings which are pending or threatened of which the
Group is aware) during a period covering at least the
previous 12 months, which may have, or have had in
the recent past significant effects on the Group and/or
the Group’s financial position or profitability.
Insurance
The Group’s strategy for managing insurable risks is
designed to defend the interests of employees and
customers and to protect the environment, the Compa-
ny’s assets and its shareholders’ investment. This strat-
egy entails:
Identifying and quantifying risk using different report-
ing systems.
Preventing risks. The Group has a realistic preven-
tion policy to ensure safety at its sites. The Triple A
approach, conducted with insurance company experts,
aims to enhance processes to control and manage
risks by identifying vulnerable areas and implementing
appropriate solutions to preserve the long-term sus-
tainability of the Group’s manufacturing resources and
business. This approach builds on preventive meas-
ures already in place such as regular inspections, dan-
ger and vulnerability studies, safety management for
people and equipment and security plans. As concerns
risks of average frequency and intensity, the Group
also has ongoing programs 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.
Maintaining the necessary insurance cover for the
main risks facing Group companies (civil liability, prop-
erty damage and business interruption, environmental
accidents and transportation risk), under global pro-
grams. The Group continues to carefully screen insur-
ance and reinsurance companies and evaluate their
solvability. To maintain essential levels of cover while
also optimizing insurance costs in light of constraints in
the insurance and reinsurance markets, the Group has
adopted a policy of self-insuring a certain number of
recurring risks, whose frequency and financial impact
can be reliably estimated (primarily automobile risks).
Through its reinsurance subsidiary, the Group covers
moderate property damage, business interruption and
civil liability risks. The amounts involved are not mate-
rial at the consolidated level.
In addition, the Group has taken out specific cover in
response to certain local conditions, regulations or the
requirements of certain risks, projects and businesses.
This cover has been renewed in 2007.
Liability insurance
The Group is covered by a global liability insurance
program. Insured values under this program total 230
million, representing adequate coverage of 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 the Group in all
countries except for the United States, Canada and
Mexico where a separate program has been estab-
lished to take account of the specific requirements and
characteristics of the North American market. Aggre-
gate settlements under the global program are capped
at 250 million and specific limits apply to certain
risks, such as earthquake damage and machine dam-
age. In 2007, a combined program will be set up, cov-
ering all sites worldwide. In 2006, external auditors
prepared a report on the impact of a major event caus-
ing an interruption of one of the Group’s businesses.
The external auditors’ findings were used to develop
an analysis model that the Group is planning to roll out
to other businesses.
Transport insurance
A global transport insurance program has been set up
for the Group in all countries except for the United
States, Canada and Mexico where a separate program
has been established to take account of the specific
requirements and characteristics of the North Ameri-
can market. The program covers all goods shipments,
including between Group facilities, by all means of
transport, with a maximum insured value of 15.2 mil-
lion per convoy.
Description of the company and its businesses
32