Identification, assessment and steering of risks

We only assume business risks if they are considered to be manageable and if the associated opportunities promise an appropriate increase in our value. We bear the risks associated with the core processes of the wholesale business ourselves. These core processes include the development and implementation of business models, decisions about store locations and the procurement and sale of merchandise and services. Risks associated with supporting processes are mitigated within the group or transferred to third parties where reasonable. We generally do not assume risks that are related neither to core nor to supporting processes. Risks assessed as probable are included in our business plans.

Risks are identified and assessed in the annual risk inventory for METRO AG and its subsidiaries. This is based on a standardised risk catalogue. In addition, business model-specific risks are supplemented locally.

We classify all risks according to standard criteria using quantitative and qualitative scales. One part of the assessment focuses on the loss potential, which includes negative effects on our business objectives. The key indicator here is EBIT. The other part of the assessment focuses on the probability of occurrence. We break risks down into the following 4 risk categories:

All risks are assessed with their potential impact at the time of the risk analysis and before potential mitigating measures (presentation of gross risks). The central IT tool myGRC is used to identify and assess risks and to document key control measures. We generally assess risks over a prospective 1-year period; strategic risks cover at least the medium-term planning horizon of 3 years. Longer-term risks and opportunities, for example related to climate change or political risks, are additionally assessed by the relevant functional experts.

After the risks are identified and assessed by the companies, they are allocated by topic to the various functions within METRO and validated by the respective divisional managers; if necessary, they are then adjusted and supplemented. Based on these so-called functional risk profiles, the Group Governance department prepares a proposal of consolidated risks. Before the proposal is submitted to the Management Board of METRO AG for authorisation, it is first reviewed and approved by the GRC Committee.

Systematically identifying and communicating opportunities is an integral part of METRO’s corporate management.

For this purpose, we conduct macroeconomic analyses, study relevant trends and evaluate market, competition and locality analyses. We also analyse the critical success factors of our business models and the relevant cost drivers of our company. The Management Board of METRO AG specifies the derived market and business opportunities as well as efficiency enhancement potential in the context of strategic as well as short-term and medium-term planning. It does so by engaging in a regular dialogue with the management of the group companies and units at the central holding company. As a wholesale company, we pursue market- and customer-driven business approaches in this process and continually review our strategy to ensure long-term sustainable growth. The consolidated opportunities and risks are presented jointly to the GRC Committee and the Management Board.

The responsibility for steering risks lies with the functionally and operationally responsible persons within METRO. The ICS supports the group companies in fulfilling their responsibility to manage process risks.