Philips 2007 Annual Report Download - page 94

Philips Annual Report 2007100
training) was updated in 2007. Furthermore, 2007 saw
the development and worldwide roll-out of a train-the-
trainer program for compliance awareness. Two-day
training sessions were held in Latin America, Asia Pacic
and Europe, with the remaining sessions scheduled for
the rst quarter of 2008. This program provides for an
annual refresher course.
Risk categories
Taking risks is an inherent part of entrepreneurial behavior.
A structured risk management process encourages
management to take risks in a controlled manner. Philips
has a structured risk management process in place that
recognizes different risk categories at Strategic, Market,
Operational, Financial and Compliance level.
Strategic risks address threats and opportunities that
inuence Philips’ strategic ambitions. The Market risks
cover the effect that changes in the market may have
on Philips. Risks related to areas such as economic and
political developments are likely to affect all market
participants in a similar manner. Operational risks include
adverse unexpected developments resulting from internal
processes, people and systems, or from external events
that are linked to the actual running of each business
(examples are product creation and supply chain
management). Within the area of Financial risks, Philips
identies risks related to Treasury, Pensions, Fiscal and
Legal. Compliance risks cover unanticipated failures to
enact appropriate policies and procedures.
Strategic risks
Failure to deliver the Philips strategy may negatively
impact shareholder value.
Through its Vision 2010, Philips aims to achieve
protable growth. Philips’ inability to transform this
vision into action and to meet the nancial targets
as planned, may cause its share price to drop.
End-user-driven innovation and identication of new
sources of differentiation are important in realizing
Philips’ protable growth ambitions.
Philips’ longer-term success depends on, amongst
other things, innovation based on end-user insight using
technology as value enabler. Moreover, some of Philips’
divisions continue to face diminishing opportunities to
differentiate on the basis of technical performance only.
This makes the identication of new sources of both
tangible and intangible differentiation essential.
of each business unit. The GBP incorporate a whistleblower
policy, standardized complaint reporting and a formal
escalation procedure.
The global implementation of the One Philips Ethics Line
ensures that alleged violations are registered and dealt
with consistently within one company-wide system. In
2007, the French privacy authorities granted approval
for the roll-out of the hotline in that country (completed in
November). In Germany, the workers’ representation bodies
also approved the introduction of a hotline. These approvals
now ensure comprehensive company-wide implementation.
To drive the practical deployment of the GBP, a set
of directives has been published, including a Supply
Management Code of Ethics and a Financial Code
of Ethics (www.philips.com/about/investor). In 2007,
the updated version of the GBP Directives was approved
and adopted, reecting ongoing developments in codes
of conduct and business integrity legislation. The main
updates related to Philips’ endorsement of the UN
Global Compact, policy on HIV/AIDS, health and safety
policy, integrity and ethics in advertising, and in particular
directives on the giving of gifts. To ensure compliance
with the highest standards of transparency and accountability
by all employees performing important nancial functions,
the Financial Code of Ethics contains, amongst other
things, standards to promote honest and ethical conduct,
and full, accurate and timely disclosure procedures to
avoid conicts of interest. The Company did not grant
any waivers of the Financial Code of Ethics in 2007.
In order to publicize the updated GBP Directives,
a global internal communications program was rolled
out in the rst half of 2007, with participation of the Board
of Management and Group Management Committee and
the respective Area and Country Management.
A company-wide toolkit has been developed and rolled
out in 2007 for the compulsory registration of gifts to
third parties to ensure full transparency in monitoring
compliance with company standards.
To reinforce awareness of the need for compliance
with the GBP, a web-based GBP training tool has been
rolled out throughout the company in 22 different
languages, covering more than 95% of the employees
with on-line access.
The e-training program for (new) compliance ofcers
(including complaint-handling procedures and dilemma
8 Financial highlights 10 Message from the President 16 The Philips Group 62 The Philips sectors