Siemens 2007 Annual Report Download - page 173

Management’s discussion and analysis 173
Management’s discussion and analysis
Risk Management
Siemens’ risk management policy stems from a philosophy of pursuing sustain-
able growth and creating economic value while avoiding and managing inappro-
priate risks. Because risk management is an integral part of how we plan and exe-
cute our business strategies, our risk management policy is set by the Corporate
Executive Committee (CEC), which is a committee of the Managing Board that
includes both the CEO and CFO. Siemens’ organizational and accountability struc-
ture requires each of the respective Group managements to execute risk manage-
ment programs that are tailored to their specifi c industries, yet consistent with
the overall policy established by the Corporate Executive Committee.
Siemens has implemented and coordinated a set of risk management and con-
trol systems which support us in the early recognition of developments endanger-
ing the future existence of the company. The most important of these systems
include our enterprise-wide processes for strategic planning and management
reporting. The former is intended to support us to consider potential risks well in
advance of major business decisions, while the latter is intended to enable us to
monitor such risks more closely as our business progresses. Our internal auditors
also regularly review the adequacy and effectiveness of our risk management sys-
tem. Thereby, defi cits are detected and appropriate measures for their elimination
become adopted. This coordination of processes and procedures is intended to
help ensure that the Managing Board and the Supervisory Board are fully and
timely informed about signifi cant risks, as described further in the section “Cor-
porate Governance.”
In order to enhance the current risk management system Siemens decided to
implement a comprehensive and integrated Enterprise Risk Management (ERM)
approach identifying, evaluating and responding to those risks that could materi-
ally affect the achievement of Siemens’ strategic, operational, fi nancial and com-
pliance objectives.
The ERM system covers the whole spectrum of risks and further improves
strategies to enhance risk response decisions. It will be embedded in the corpo-
rate culture, promoting company-wide risk awareness. In an initial step to achieve
an integrated ERM system the CEC established a Corporate Risk Committee (CRC)
which will report to and support the CEC on matters relating to the implementa-
tion, operation and oversight of the ERM process and will assist the CEC in report-
ing to the Audit Committee of the Supervisory Board on Siemens’ ERM activities.
The CRC is comprised of the head of Corporate Finance, as the Chairperson, the
head of Corporate Technology, the head of Legal and Compliance, the CEOs of
A&D, MED, PTD and SFS, the head of Corporate Strategies, the head of Corporate
Finance Audit, the head of Corporate Personnel Germany, the head of Corporate
Finance Reporting and Taxes, the Chief Compliance Offi cer and the head of Corpo-
rate Finance Reporting.
Siemens plans to fi nalize the implementation of the new ERM system in fi scal
2008.