Risk management

UPDATING THE RISK DOCUMENTATION

We carry out standardized surveys of both the risk managers of the individual divisions and the managing directors of investees on an annual basis. In answering the questions, they update the overall picture of the potential risk situation in their area of responsibility. At the same time, the qualitative likelihood of occurrence and the relative extent of any loss are allocated to each risk identified, and appropriate measures are specified in the shape of guidelines and organizational instructions to counter the respective risk. The continuous updating of the risk documentation is coordinated centrally by Group Controlling in conjunction with Group Internal Audit. Under the guidance of the auditors, the plausibility and adequacy of the risk reports are examined on a test basis in detailed interviews with the divisions and companies concerned. The auditors assessed the effectiveness of our risk management system based on this information and established both that the risks identified were presented in a suitable manner and that measures and rules were assigned to the risks adequately and in full. We accordingly meet the requirements of the KonTraG. In addition, the Financial Services Division is subject to regular special audits by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin – the German Federal Financial Supervisory Authority) in accordance with section 44 of the Gesetz über das Kreditwesen (KWG – German Banking Act) and controls by association auditors.

Workflow rules, guidelines, instructions and descriptions are systematically recorded and can for the most part be accessed online. Adherence to these rules is assured by internal controls by the heads of the Group Internal Audit, Quality Assurance, Group Treasury, Brand Controlling and Group Controlling organizational units.

GOALS AND FUNCTIONING OF THE RISK MANAGEMENT SYSTEM

The Group’s risk management system is designed to identify potential risks at any early stage so that suitable countermeasures can be taken to avert the threat of loss to the Company, and any risks that might jeopardize its continued existence can be ruled out.

The risk management system is an integral part of the Volkswagen Group’s structure and workflows and is embedded in its daily business processes. Events that may entail a potential risk are identified and assessed on a decentralized basis in the divisions and at the investees. Countermeasures are introduced immediately, their effects are assessed and the information is incorporated into the plans in a timely manner. This means that the Board of Management always has access to an overall picture of the current risk situation through the documented reporting channels.

We are prepared to enter into transparent risks that are proportionate to the benefits expected from the business.

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