Risk management

Risk management, as it has been practiced in the voestalpine Group since the business year 2000/01, serves to ensure both the continued long-term existence of the Group and an increase in its value, thus representing a key factor in its success.

This risk management system, which has undergone numerous updates and regular expansions, has been set forth in a general procedural directive that is valid Group-wide. The systematic risk management process aids in recognizing potential risks early on and initiating appropriate action to avert dangers.

In accordance with the Austrian Company Law Amendment Act of 2008 (Unternehmensrechts-Änderungsgesetz) and the associated increased importance of an internal control system (ICS) and a risk management system, an Audit Committee has been set up within the scope of the Supervisory Board of voestalpine AG, which addresses questions related to risk management and the internal control system (ICS) and the monitoring thereof on an ongoing basis.

Both the risk management and the internal control systems are integral components of the existing management systems within the voestalpine Group. The Internal Audit department independently monitors operational and business processes and the ICS and has full discretion when reporting and assessing audit results.

Risk management covers both the strategic and the operational levels and is therefore a major element in the sustainable success of the Group.

Strategic risk management serves to evaluate and safeguard strategic planning for the future. Strategies are reviewed to ensure conformity with the Group’s system of objectives in order to ensure value-adding growth by way of an optimum allocation of resources.

Operational risk management is based on a revolving procedure that is run at least once a year throughout the entire Group. The evaluation of identified risks is implemented using an evaluation matrix that assesses possible losses and the probability of occurrence. All operational, environmental, market, procurement, technological, financial, and IT risks are documented. This process is aided by a special web-based IT system.

The preventive measures in the main risk areas presented in the Annual Report 2010/11 are still valid. They are:

Availability of raw materials

In order to ensure the supply of the required quantity and quality of raw materials and energy, the voestalpine Group has for years maintained a diversified procurement strategy that reflects the increased risks. Long-term, close relationships with suppliers, the expansion of our supplier portfolio, and the controlled expansion of the Group’s self-sufficiency are the core elements of this strategy that is becoming increasingly important in view of the trend toward higher volatility on the raw materials markets (for more details, please refer to the “Raw Materials” chapter of this Annual Report).

Guidelines for hedging raw materials price risk

CO2 issues

Failure of IT systems

Failure of production facilities

Knowledge management

Risks in the financial sector

Economic and financial crisis

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