Annual Report 2012 - Knorr-Bremse AG.

Management Report
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supply volumes within the Group. In selected cases, currency
risks are also hedged by means of derivatives. Such
measures, however, serve exclusively to hedge basic transactions
within the scope of normal business operations.
The basis for managing foreign exchange risks is provided
by the Guideline on Managing Currency Exposure in the
Knorr-Bremse Group, which sets out the procedures to be
followed and the necessary scope of hedging transactions
in binding form for all Group companies. The monitoring
of compliance with this guideline is part of the relevant
Knorr Excellence process.
The risk of fluctuations in the price of commodities that
are of relevance to Knorr-Bremse is also hedged to an appropriate
extent by means of derivatives, insofar as these
fluctuations could have a substantial impact on the
Group’s profitability. In the case of steel and aluminum,
basis hedging is undertaken to cover a part of the risk.
Business processes within the Knorr-Bremse Group are
supported by powerful state-of-the-art IT systems. In order
to avoid malfunctions, Knorr-Bremse attaches great
importance to harmonization of the hardware and software
architecture, the integrity and security of existing
data, appropriate back-up solutions, and careful management
of access control. Compliance with the IT Security
Guideline is comprehensively monitored with the aid of
internal and external audits at all major sites around the
world. The Corporate Data Center in Munich, Germany,
meets the very highest requirements (industry standard)
in terms of efficiency, reliability and security. Based on this
platform, the necessary global transparency and the integration
of all corporate sites – and of recent additions in
particular – are being further enhanced.
In Asia, as well as in the other regions, imitation and counterfeit
products remain a serious threat to business in the
commercial vehicle and rail vehicle sectors. The most effective
countermeasure to this threat is Knorr-Bremse’s
technical expertise, which on account of the safety-critical
applications of its products is both recognized and
appreciated by customers around the world.
In the high-tech environment in which Knorr-Bremse’s
products are used, there is a risk that physical limits will be
reached in product applications. In addition, the increasing
integration of production plants in emerging countries
makes safeguarding the quality of products and processes
more challenging. Here too, the systematic use of
the relevant Knorr Excellence processes ensures the high
reliability of the company’s systems portfolio.
Careful analysis of the Group-wide risk profile has revealed
that no identifiable risks exist that would threaten
the survival of the company or have a substantial impact
on its assets, financial status or profitability. Nor are any
such risks currently expected to arise in the future.
In response to increasingly stringent environmental requirements,
Knorr-Bremse has aligned its worldwide activities
with the international standard ISO 14001. The
majority of the company’s sites have already been certified
or recertified accordingly.