BMW 2015 Annual Report Download - page 80

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18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27
Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87
BMW Stock and Capital Markets
business sense. The application of more rigorous con-
sumer regulations or the stricter
interpretation of exist-
ing regulations could result in a greater number of recalls.
Some risks, however, either cannot be estimated or only
to a limited extent. In other cases, the incurrence of ex-
penses or losses may only be considered possible, but
not probable. Such items are reported as contingent lia-
bilities. It cannot be ruled out, however, that losses
from
damages could arise that are either not covered or
not fully covered by insurance policies or provisions, or
which are only reported as contingent liabilities. In ac-
cordance with IAS 37 (Provisions, Contingent Liabilities
and Contingent Assets), the required information is
not
provided if the BMW Group concludes that disclosure
of the information could seriously prejudice the out-
come of the relevant legal proceedings. Further informa-
tion on contingent liabilities is provided in note 41 to
the Group Financial Statements.
If legal risks were to materialise, they could have a low
earnings impact over the two-year assessment period.
The level of risk attached to legal risks is classified as
low. However, it cannot be ruled out that new legal
risks, as yet unidentified, could materialise that could
have a high impact on the BMW Group’s results of
operations and financial condition.
Overall assessment of the risk and
opportunities situation
The overall risk assessment is based on a consolidated
view of all significant individual risks and opportuni-
ties. In terms of strategic and sector-specific risks, the
BMW Group has identified a higher level of risk, par-
ticularly in connection with the trend towards stricter
statutory regulations. Operational risks on the purchas-
ing side are decreasing, thanks to the successful imple-
mentation of cost-cutting measures. The level of risk
attached to the category “Risks relating to the Financial
Services segment” has increased as a result of the grow-
ing size of
the portfolio. In view of these changes, the
overall risk
situation for the BMW Group has increased
compared to the previous year.
In addition to the risk categories described above, un-
foreseeable events could possibly have a negative impact
on the BMW Group’s results of operations, financial
position and net assets, as well as on its reputation. A
comprehensive risk management system is in place to
ensure that the BMW Group successfully manages risks
to the greatest extent possible. In addition, the opportu-
nities described above could potentially help the BMW
Group to achieve its targets and forecasts.
From today’s perspective, management does not see any
threat to the BMW Group’s going-concern status. As in
the previous year, identified risks are considered to be
manageable, but could – just like opportunities – have
an impact on the BMW Group’s forecasts if they were to
materialise. The BMW Group’s liquidity is stable and all
cash requirements are currently covered by available
funds and accessible credit lines.