Kendrion promotes local entrepreneurship at its companies and, consequently, offers scope to the managements to exercise the associated discretionary powers. Kendrion actively conveys the essential need to maintain a healthy equilibrium between entrepreneurial spirit and the extent to which risks are accepted. Adequate risk management is an integral element of good business practice. When risks are made visible Kendrion’s managers can implement adequate measures in their everyday management that offer them optimum control of the risks. Kendrion’s risk management is not intended to eliminate all risks entirely: seeking business opportunities is not without risks. Kendrion’s objective is to adopt an approach to business risks that minimises surprises and the impact of any surprises that nevertheless occur, while always taking account of the necessary balance between risk exposure and costs. Kendrion’s risk-reward appetite is periodically evaluated by the Executive Board and shared with and discussed by the Executive Committee. The Executive Board balances business opportunities with the expectations of shareholders, employees, regulators and other stakeholders. The risk-reward appetite can be speficied in the following terms:

Kendrion has a responsibility to put internal controls and procedures into place and test them to verify their adequate performance. The local management is expected to be fully aware of the operating risks and the necessity for internal control procedures. Kendrion has devoted structural attention to the optimisation of the risk management and control system as part of the everyday decision-making. All companies are logically confronted with business risks during the pursuit of their operations.

The Executive Board wishes to emphasise that risk management and control systems – no matter how professional they may be – can neither offer absolute guarantees that the company’s objectives shall be achieved nor entirely prevent material errors, loss, fraud, or violations of laws or regulations.