Siemens 2014 Annual Report Download - page 230

108 A. To our Shareholders 131 B. Corporate Governance 171 C. Combined Management Report
172 C. Business and economic environment
187 C. Financial performance system
193 C. Results of operations
205 C. Financial position
210 C. Net assets position
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defined approval processes assists us in identifying and re-
sponding to project risks at an early stage, even before entering
the bidding phase. Furthermore, we maintain appropriate
insurance levels for potential cases of damage and liability 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 demand by
closely monitoring the macroeconomic conditions and devel-
opments in relevant industries, and by adjusting capacity and
implementing cost-reduction measures in a timely and consis-
tent manner, if deemed necessary.
C... RISK MANAGEMENT ORGANIZATION
AND RESPONSIBILITIES
Operational and organizational structure of the Enterprise Risk Management (ERM) process as of September 30, 2014
Corporate Risk & Internal Control Committee (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.
Managing Board
Overall responsibility for the Risk and Internal Control System.
Defines risk policy and ERM strategy.
Chief Risk & Internal Control Officer
Chairman of the CRIC. Defines and monitors application of ERM strategy,
policy and methodology. Consolidates Siemens wide risk and opportunity
profile for CRIC.
Audit Committee
Oversees the effectiveness of the risk management and
internal control system.
Sector Risk & Internal
Control Committees
Lead Country Risk & Internal
Control Committees
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 Management Lead Country Management Heads of Corporate Units
Implement ERM system and ensure management and monitoring of risks and opportunities in their respective organization.
1 The term “Sector” in this chart comprises Sectors, SFS and SRE.
To oversee the ERM process and to further drive the integration
and harmonization of existing control activities to align with
legal and operational requirements, the Managing Board estab -
lished a Corporate Risk and Internal Control Department,
headed by the Chief Risk & Internal Control Officer, and a Cor-
porate Risk and Internal Control Committee (CRIC). The CRIC
obtains risk and opportunity information from the Risk Com-
mittees established at the Sector, SFS, SRE and regional level as
well as from the Heads of Corporate Units, which then forms
the basis for the evaluation of the company-wide risk and op-
portunity situation. The CRIC reports to and supports the Man-
aging Board on matters relating to the implementation, opera-
tion and oversight of the risk and internal control system and
assists the Managing Board in reporting to the Audit Commit-
tee of the Supervisory Board. The CRIC is composed of the Chief
Risk & Internal Control Officer, as the chairperson, and mem-
bers of senior management such as the Sector and SFS CEOs,
the CFO of Siemens, and selected Heads of Corporate Units.
C.. Risks
Below we describe the risks that could have a material adverse
effect on our business, financial condition (including effects on
assets, liabilities and cash flows), results of operations and
repu tation. The order in which the risks are presented in each
of the four categories reflects the currently estimated relative
exposure for Siemens associated 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 result in a higher negative impact
on Siemens than risks currently considered to entail a higher
risk exposure. Additional risks not known to us or that we cur-
rently consider immaterial may also negatively impact our busi-
ness operations. Unless otherwise stated, the risks described
below relate to all of our segments.