GE 2005 Annual Report Download - page 36

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GECS employs about 11,000 dedicated risk professionals, including 6,600 involved in collection activities
and 400 specialized asset managers who evaluate leased asset residuals and remarket off-lease equipment.
GE and GECS manage a variety of risks including liquidity, credit, market and event risks.
• Liquidity risk is the risk of being unable to accommodate liability maturities, fund asset growth and meet
contractual obligations through access to funding at reasonable market rates. Additional information about our
liquidity and how we manage this risk can be found in the Financial Resources and Liquidity section and in
notes 18 and 27.
• Credit risk is the risk of financial loss arising from a customer or counterparty failure to meet its contractual
obligations. We face credit risk in our lending and leasing activities (see the Financial Resources and Liquidity
and Critical Accounting Estimates sections and notes 1, 13, 14 and 29) and derivative financial instruments
activities (see note 27).
• Market risk is the potential loss in value of investment and other asset and liability portfolios, including
financial instruments, caused by changes in market variables, such as interest and currency exchange rates and
equity and commodity prices. We are exposed to market risk in the normal course of our business operations as
a result of our ongoing investing and funding activities. We attempt to mitigate the risks to our various
portfolios arising from changes in interest and currency exchange rates in a variety of ways that often include
offsetting positions in local currencies or selective use of derivatives. Additional information about how we
mitigate the risks to our various portfolios from changes in interest and currency exchange rates can be found in
the Financial Resources and Liquidity section and in note 27.
• Event risk is that body of risk beyond liquidity, credit and market risk. Event risk includes the possibility of
adverse occurrences both within and beyond our control. Examples of event risk include natural disasters,
availability of necessary materials, guarantees of product performance and business interruption. This type of
risk is often insurable, and success in managing this risk is ultimately determined by the balance between the
level of risk retained or assumed and the cost of transferring the risk to others. The decision as to the
appropriate level of event risk to retain or cede is evaluated in the framework of business decisions. Additional
information about certain event risk can be found in note 29.
Segment Operations
Operating segments comprise our six businesses focused on the broad markets they serve: Infrastructure, Industrial,
Healthcare, NBC Universal, Commercial Finance and Consumer Finance. For segment reporting purposes, certain
GECS businesses are included in the industrial operating segments that actively manage such businesses and report
their results for internal performance measurement purposes. These include Aviation Financial Services, Energy
Financial Services and Transportation Finance reported in the Infrastructure segment, and Equipment Services
reported in the Industrial segment.
In the fourth quarter of 2005, we commenced reporting businesses affected by our insurance exit as
discontinued operations for all periods presented. These businesses were previously reported in the Commercial
Finance segment. Also, during the fourth quarter of 2005, our insurance activities, previously reported in the
Commercial Finance segment, were transferred to Corporate items and eliminations for all periods presented.