Risk management in The Linde Group is an integral part of all our decisions and business processes. The Linde Group, a technology company with global operations, is exposed to a great variety of risks in the course of its international business. It is our willingness to take risks that enables us to exploit opportunities as they arise.
We therefore see risk management as an ongoing task, one which involves the recording, analysis and evaluation of areas which relate to potential and actual developments.
The Linde AG Executive Board has established a comprehensive, systematic and efficient risk management system, the basic principles of which are laid down in Group guidelines, a system which is adapted to suit our corporate structure and which represents a vital part of the Group management process. It is incumbent on the operational management of the risk owner to take direct responsibility for the early recognition, management and communication of the risks. The next level of management is responsible for controlling those risks. Under the risk management system, the Group companies adopt a bottom-up approach and report the status of any significant risks and any changes in those risks, based on graduated cut-off points. In addition, any risks which arise at short notice or which have repercussions for the whole Group are communicated directly to the appropriate personnel in the Group, irrespective of the normal reporting channels.
The aim is to identify potential risks arising from our operations at an early stage by incorporating them into a database, to assess them using specific criteria, to evaluate the extent and characteristics of the risks and to introduce appropriate precautionary and security measures.
Monthly Group reporting is of the utmost importance in the monitoring and control of economic risks in current business operations. It must ensure that the course of business in the individual Group companies is reflected and described in accordance with uniform guidelines.
Every quarter, the Executive Board is presented with status reports from the central risk management department which are then discussed at an Executive Board meeting. The status reports include not only a presentation of the significant risk positions in the individual divisions and regions, but also qualitative and quantitative assessments of the probability of occurrence and loss potential of the risks identified, which might jeopardise the Group companies and the Group as a whole. Moreover, the operational members of the Executive Board report every six months on the risk situation within their sphere of responsibility.
Risk workshops are held regularly. The central risk management department is responsible for the implementation of risk management at a global level and ensures that not only are staff aware of risk, they are also able to make appropriate risk assessments.
The internal audit department performs reviews at regular intervals of the efficiency and effectiveness of the risk management system. The external auditors also assess the effectiveness of the risk management system and submit regular reports about the outcome of their reviews to the Group Executive Board and Supervisory Board.
Furthermore, there are rules of conduct in The Linde Group which are set out in guidelines and other standards. Speculative transactions or other arrangements of a speculative nature are not permitted. Our conduct towards our suppliers, our customers and the community is fair, and we are aware of our responsibilities.