Siemens 2015 Annual Report Download - page 34

Combined Management Report
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materially harm our business, financial condition and results of
operations. Moreover, even if we ultimately prevail on the mer-
its in any such proceedings, we may have to incur substantial
legal fees and other costs defending ourselves against the un-
derlying allegations. We maintain liability insurance for certain
legal risks at levels our management believes are appropriate
and consistent 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. Finally, there can be no assurance that we will be able
to maintain adequate insurance coverage on commercially rea-
sonable terms in the future.
A.8.3.5 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 highly competitive
markets and technology changes currently being the most sig-
nificant. Even though the assessments of individual risk expo-
sures have changed during fiscal  due to developments in
the external environment as well as the effects of our own mit-
igation measures, the overall risk situation for Siemens did not
change significantly as compared to the prior year. At pres-
ent, no risks have been identified that either individually or in
combination could endanger our ability to continue as a going
concern.
A.8.4 Opportunities
Within our Enterprise Risk Management (ERM) we regularly
identify, evaluate and respond to opportunities that present
themselves in our various fields of activity. Below we describe
our most significant opportunities. 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 opportunities and thus provides an indication of the
opportunities’ current importance to us. The described oppor-
tunities are not necessarily the only ones we encounter. In ad-
dition, our assessment of opportunities is subject to change as
our Company, our markets and technologies are constantly de-
veloping. It is also possible that opportunities we see today will
never materialize.
Acquisitions, equity investments, partnerships and divest-
ments: We constantly monitor our current and future markets
for opportunities for strategic acquisitions, equity investments
or partnerships to complement organic growth. Such activities
could help us to strengthen our position in our existing mar-
kets, provide access to new markets or complement our techno-
logical portfolio in selected areas. Opportunities might also
arise from well executed divestments further optimizing our
portfolio and generating divestment gains.
Electrification, automation and digitalization: Siemens is
positioned along the value chains of electrification, automa-
tion and digitalization in order to increase future market
penetration. Along these value chains, we have identified sev-
eral growth fields in which we see our greatest long-term
potential. We are orienting our resource allocation toward these
growth fields and have announced concrete measures in this
direction. For example, we see an opportunity to leverage busi-
ness analytics across verticals and introduce cloud-enabled soft-
ware and IT services (e. g. predictive maintenance) resulting in
additional business volume, market share and customer reten-
tion. We intend to fully exploit the potential of increasing digita-
lization not just in manufacturing. Utilizing software and simu-
lations, the Digital Factory Division makes product development
considerably faster and more efficient. Data-driven services,
software and IT solutions are of decisive importance as they
have a substantial influence on all of our future growth fields.
Success from innovation: Innovation is a central part of
Siemens “Vision ”, an entrepreneurial concept, leading
Siemens into the future in the three stages: first we “drive per-
formance”, then we “strengthen core” and finally we “scale up”
to attain our goals. We do this by investing significantly in R & D
in order to develop innovative, sustainable solutions for our
customers and to simultaneously safeguard our competitive-
ness. We are an innovative company and invent new technolo-
gies that we expect will meet future demands in accordance
with the megatrends of demographic change, urbanization,
climate change and globalization. We are granted thousands of
new patents every year and continuously develop new con-
cepts and convincing business models. We open up access to
new markets and customers through new marketing and sales
strategies as well as Divisional master plans.
Political stabilization of critical countries and recovery of
worldwide economic environment: We see an opportunity
that political stabilization of critical countries may lead to
higher volume because it gives us the opportunity to catch up
revenue that was unavailable in past years. Furthermore, a
rapid worldwide recovery of the economic environment could
also lead to additional volume and profit for Siemens.
Continuously developing and implementing initiatives to
reduce costs, boost sales efforts, adjust capacities, improve
our processes, realize synergies and streamline our port-
folio: In an increasingly competitive market environment, a