Siemens 2010 Annual Report Download - page 184

6 To our shareholders 21 Corporate Governance 49 Combined management’s discussion and analysis
50 Business and operating environment
78 Fiscal  – Financial summary
81 Results of operations
98 Financial position
110 Net assets position
113 Overall assessment of the economic position

RISK MANAGEMENT
Our risk management policy stems from a philosophy of pursu-
ing sustainable growth and creating economic value while
avoiding and managing inappropriate risks. As risk manage-
ment is an integral part of how we plan and execute our busi-
ness strategies, our risk management policy is set by the
Managing Board. Our organizational and accountability struc-
ture requires each of the respective managements of our Sec-
tors, Cross-Sector Businesses, Regional Clusters and Corporate
Units to implement risk management programs that are tai-
lored to their specific industries and responsibilities, while
being consistent with the overall policy established by the
Managing Board.
We have implemented and coordinated a set of risk manage-
ment and control systems which support us in the early recog-
nition of developments jeopardizing the continuity of our
business. The most important of these systems include our
enterprise-wide processes for strategic planning and manage-
ment reporting. Strategic planning is intended to support us in
considering potential risks well in advance of major business
decisions, while management reporting is intended to enable
us to monitor such risks more closely as our business pro-
gresses. Our internal auditors regularly review the adequacy
and effectiveness of our risk management system. Accordingly,
if deficits are detected, it is possible to adopt appropriate mea-
sures for their elimination. 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
significant risks.
Risk management at Siemens is based on a comprehensive,
interactive and management-oriented Enterprise Risk Manage-
ment (ERM) approach that is integrated into the organization
and that addresses both risks and opportunities. Our ERM ap-
proach is based on the worldwide accepted “Enterprise Risk
Management – Integrated Framework” developed by the “Com-
mittee of Sponsoring Organizations of the Treadway Commis-
sion” (COSO). It connects the ERM process with a company ’s
financial reporting process and is closely integrated into the
internal control system. It considers a company ’s strategy, the
efficiency and effectiveness of its business operations, the reli-
ability of its financial reporting as well as compliance with
relevant laws and regulations to be equally important.
The ERM process aims for an early identification and evalua-
tion of, and response to, those risks and opportunities that
could materially affect the achievement of our strategic, op-
erational, financial and compliance objectives. Our ERM is
based on a net risk approach, covering risks and opportunities
remaining after the execution of existing control measures. In
order to provide a comprehensive view on our business activi-
ties, risks and opportunities are identified in a structured way
combining elements of a top-down and bottom-up approach.
Operational and organizational structure of the Enterprise Risk Management (ERM) process
1 The term Sector in this chart comprises Sectors, Cross-Sector Businesses and SRE.
Overall responsibility for the Risk and Internal Control System.
Defines risk policy and ERM strategy. Oversees the effectiveness of the risk management and internal control system.
Managing Board Audit Committee
Implement ERM system and ensure management and monitoring of risks and opportunities in their respective organization.
Heads of Corporate UnitsSector  Management Cluster Management
Oversee the risk and internal control activities for their area of responsibility and provide
the Management with information necessary to report to the CRIC.
Sector Risk & Internal
Control Committee
Cluster Risk & Internal
Control Committee
Chairman of the CRIC. Defines and monitors application of ERM strategy,
policy and methodology. Consolidates Siemens wide risk and opportunity
profile for CRIC.
Reports to and supports the Managing Board in matters relating
to the implementation, operation and oversight of an effective
Risk and Internal Control System.
Corporate Risk & Internal Control Committee (CRIC) Chief Risk & Internal Control Officer