Siemens 2011 Annual Report Download - page 225

153 D. Consolidated Financial Statements
273 E. Additional information
143 C. Additional information for supplemental
financial measures
145 C. Siemens AG (Discussion on basis of
German Commercial Code)
151 C. Notes and forward-looking statements
140 C. Information required pursuant to Section  ()
and Section  () no.  of the German Commer-
cial Code (HGB) and explanatory report
142 C. Compensation report and Corporate Governance
statement pursuant to Section a of the German
Commercial Code (HGB)

bility risks in order to reduce our exposure to such risks and to
avoid or minimize potential losses. Among others, we address
the risk of fluctuations in economic activity and customer de-
mand by closely monitoring the macroeconomic conditions
and developments in relevant industries, and by adjusting ca-
pacity and implementing cost-reduction measures in a timely
and consistent manner, if deemed necessary.
To oversee the ERM process and to further drive the integra-
tion and harmonization of existing control activities in align-
ment with legal and operational requirements, the Managing
Board established a Corporate Risk and Internal Control De-
partment, headed by the Chief Risk & Internal Control Officer,
and a Corporate Risk and Internal Control Committee (CRIC).
The CRIC obtains risk and opportunity information from the
Risk Committees established at the Sector, SFS, SRE and re-
gional Cluster level as well as from the Heads of Corporate
Units, which then forms the basis for the evaluation of the
company-wide risk and opportunity situation. The CRIC re-
ports to and supports the Managing Board on matters relating
to the implementation, operation and oversight of the risk
and internal control system and assists the Managing Board
in reporting to the Audit Committee of the Supervisory Board.
The CRIC is composed of the Chief Risk & Internal Control Offi-
cer, as the chairperson, and members of senior management
such as the Sector and SFS CEOs, the CFO of Siemens, and se-
lected Heads of Corporate Units.
Below we describe the risks that could have a material ad-
verse effect on our business, our financial condition and re-
sults of operations, the price of our shares and American de-
pository shares (ADS), and our reputation. The order in which
the risks are presented in each of the four categories reflects
the currently estimated relative exposure for Siemens associ-
ated with these risks and thus provides an indication of the
risks’ current importance to us. Nevertheless, risks currently
considered to entail a lower risk exposure could potentially re-
sult in a higher negative impact on Siemens than risks cur-
rently considered to entail a higher risk exposure. Additional
risks not known to us or that we currently consider immateri-
al may also negatively impact our business operations. We do
not expect to incur any risks that alone or in combination
would appear to jeopardize the continuity of our business.
Operational and organizational structure of the Enterprise Risk Management (ERM) process
1 The term Sector in this chart comprises Sectors, SFS and SRE.
Implement ERM system and ensure management and monitoring of risks and opportunities in their respective organization.
Oversees the effectiveness of the risk management and
internal control system.
Audit Committee
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
Heads of Corporate UnitsSector Management  Cluster Management
Overall responsibility for the Risk and Internal Control System.
Defines risk policy and ERM strategy.
Managing Board
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