Siemens 2013 Annual Report Download - page 242

92 A. To our Shareholders
117 B. Corporate Governance 155 C. Combined Management Report
156 C. Business and economic environment
173 C. Financial performance system
179 C. Results of operations
192 C. Financial position
204 C. Net assets position
207 C. Overall assessment of the economic position
209 C. Subsequent events
210 C. Sustainability
227 C. Report on expected developments and
associated material opportunities and risks

at levels our management believes are appropriate and consis-
tent with industry practice. Our insurance policy, however,
does not protect us against reputational damage. Moreover,
we may incur losses relating to legal proceedings beyond the
limits, or outside the coverage, of such insurance or exceeding
any provisions made for legal proceedings related losses. Fi-
nally, there can be no assurance that we will be able to main-
tain adequate insurance coverage on commercially reasonable
terms in the future. Each of these risks may have a material
adverse effect on our business, financial condition and results
of operations.
Examinations by tax authorities and changes in tax regula-
tions could adversely affect our business, financial condi-
tion and results of operations: We operate in around 
countries and therefore are subject to different tax regulations.
Changes in tax law in any of these jurisdictions could result in
higher tax expense and payments. Furthermore, legislative
changes could materially impact our tax receivables and liabili-
ties as well as deferred tax assets and deferred tax liabilities. In
addition, the uncertain tax environment in some regions could
limit our ability to enforce our rights. As a globally operating
organization, we conduct business in countries subject to
complex tax rules, which may be interpreted in different ways.
Future interpretations or developments of tax regimes may
affect our business, financial condition and results of opera-
tions. We are regularly examined by tax authorities in various
jurisdictions.
We are subject to environmental and other governmental
regulations: Some of the industries in which we operate are
highly regulated. Current and future environmental and other
governmental regulations or changes thereto may require us
to change the way we run our operations and could result in
significant increases in our operating or production costs. In
addition, while we have procedures in place to ensure compli-
ance with applicable governmental regulations in the conduct
of our business operations, it cannot be excluded that viola-
tions of applicable governmental regulations may be caused
either by us or by third parties that we contract with, including
suppliers or service providers, whose activities may be at-
tributed to us. Any such violations expose us to the risk of lia-
bility, reputational damage or loss of licenses or permits that
are important to our business operations. In particular, we
could also face liability for damage or remediation for environ-
mental contamination at the facilities we design or operate.
For example, we are required to bear environmental clean-up
costs mainly related to remediation and environmental protec-
tion liabilities, which have been accrued based on the estimat-
ed costs of decommissioning facilities for the production of
uranium and mixed-oxide fuel elements in Hanau, Germany,
as well as a nuclear research and service center in Karlstein,
Germany. For further information, see NOTE  in D.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Under certain cir-
cumstances, we establish provisions for environmental risks.
With regard to certain environmental risks, we maintain liabili-
ty insurance at levels that our management believes are appro-
priate and consistent with industry practice. We may incur
environmental losses beyond the limits, or outside the cover-
age, of such insurance, and such losses may have a material
adverse effect on our business, financial condition and results
of our operations. In addition, our provisions for environmen-
tal liabilities may not be sufficient to cover our ultimate losses
or expenditures resulting therefrom.
C... ASSESSMENT
OF THE OVERALL RISK SITUATION
The most significant challenges have been mentioned first in
each of the four categories Strategic, Operations, Financial and
Compliance with the risks caused by the macroeconomic envi-
ronment currently being our most significant. Even though
the assessments of individual risk exposures have changed
during fiscal  due to developments in the external envi-
ronment as well as the effects of our own mitigation mea-
sures, the overall risk situation for Siemens did not change sig-
nificantly as compared to the prior year. At present, no risks
have been identified that either individually or in combination
could endanger our ability to continue as a going concern. We
are confident that we can continue to successfully counter the
challenges arising from the risks mentioned above.
C.. Opportunities
Within our comprehensive, interactive and management-ori-
ented Enterprise Risk Management (ERM) approach that is
integrated into the organization and that addresses both risks
and opportunities, we regularly identify, evaluate and respond
to opportunities that present themselves in our various fields
of activity. Below we describe our most significant opportuni-
ties. Unless otherwise stated, the opportunities described
below relate to all of our segments. The order in which the
opportunities are presented reflects the currently estimated
relative exposure for Siemens associated with these opportu-
nities and thus provides an indication of the opportunities’
current importance to us. Nevertheless, opportunities current-
ly considered to entail a lower opportunity exposure could
potentially result in a higher positive impact on Siemens than