To minimize credit default risks, we systematically examine the credit rating and payment behavior of our counterpar- ties. The latter include customers, the banks we do business with, and other business partners where payment default can have an influence on our financial situation. We safeguard availability of financial resources through central control and monitoring of our Group-wide finan- cial resources. In addition, by utilizing various financing instruments, we centrally provide a financial resources framework that covers medium-term needs going beyond the planned financial cash inflow from our operating business. We reduced our assessment of the financial market risks in comparison to the previous year. Continued high cash inflows from operating business activity and the existing gen- eral financial resources framework suffice to cover the expected cash outflows for investments, repayments, and dividends. Innovation Risks ALTANA’s position as an innovation and technology leader is a major success factor for the company. It is important for a supplier of highly specialized chemical products to continu- ally introduce new products on the market and to be perceived by our customers as a competent and innovative part- ner. If this was no longer the case in the future, risks could result for our sustainable growth, the attainment of our prof- itability targets, and ALTANA’s positioning in the relevant markets. The same applies if competitors patent knowhow that we use but have not protected, as we would then no longer be able to use it, or only at additional cost. With our innovation culture, which is put into practice at all levels of our organization, we highlight the importance of innovation and safeguard its status. Both at a decentralized and a Group level, we continually evaluate and control our research and development activities based on financial and non-financial criteria. By investing above-average amounts in research and development and focusing on product adjust- ments and new developments, we can continually intro- duce products on the market that are tailored to customers’ individual and current needs and thus heighten our com- petitive edge. It is important to protect knowhow we develop with patents to convert our knowledge edge into economic success. This includes safeguarding technologies as well as methods and product properties we currently use so that other companies cannot patent them. 2015 saw no significant change in our assessment of innovation risks in comparison to the previous year. Other Risks Production risks concern technical disruptions or human fail- ure in production plants that can be harmful to people or the environment. Our goal is to minimize the effects of ma- chine failure on the value chain by operating production lines independently from one another. It is compulsory for our staff to receive training in the clearly defined process and quality standards in the areas in question. In addition, we con- clude property damage as well as plant and equipment breakdown insurances. Information technologies form the basis of nearly all of ALTANA’s business and communications processes. Break- downs or other disruptions of IT systems can lead to far-reach- ing impairments in all of the Group’s value-added stages, which can have significant effects on business performance (IT risks). In addition, potential risks arise from data loss or theft of business secrets. ALTANA attaches great importance to smooth availability of IT applications and services. To guarantee this, corresponding processes and organizational structures have been established. Emergency plans are in place in case of significant disruptions or losses of data. Delivery of faulty products can cause damage to people, property, or the environment and thus cause liability risks. This can have significant effects on the Group’s asset situa- tion. We minimize this risk by standardizing production 62 Expected Developments
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