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CONSOLIDATED FINANCIAL REPORT | EXPLANATORY NOTES
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C. FINANCIAL RISK MANAGEMENT
The Group's activities are exposed to various forms of risk: market risk (including exchange rate, interest rate
and price risks), credit risk and liquidity risk. The Group's risk management strategy focuses on the
unpredictability of markets and aims to minimise the potentially negative impact on the Group's results.
Some types of risk are mitigated using derivatives.
Monitoring of key financial risks is centrally coordinated by the Group Finance Department, and by the
Purchasing Department where price risk is concerned, in close cooperation with the Group's operating
companies. Risk management policies are approved by the Group Finance, Administration and Control
Department, which provides written guidelines on managing the above risks and on using (derivative and
non-derivative) financial instruments.
The impact on profit and equity presented in the following sensitivity analyses has been determined net of
tax, calculated using the Group's weighted average theoretical tax rate.
[a] Exchange rate risk
The Group operates worldwide and is therefore exposed to exchange rate risk caused by changes in the
value of trade and financial flows expressed in a currency other than the unit of account of individual Group
companies.
The principal exchange rates affecting the Group are:
Euro/British Pound: in relation to trade and financial transactions by Eurozone companies on the
British market and vice versa;
Euro/US Dollar: in relation to trade and financial transactions in US dollars by Eurozone companies
on the North American and Middle Eastern markets, and similar transactions in Euro by North
American companies on the European market;
United Arab Emirates Dirham/Euro: in relation to trade and financial transactions by Eurozone
companies on the United Arab Emirates market;
Brazilian Real/US Dollar: in relation to trade and financial transactions in US dollars by Brazilian
companies on foreign markets and vice versa;
Euro/Qatari Riyal: in relation to trade and financial transactions by Eurozone companies on the
Qatari market;
Euro/Norwegian Krone: in relation to trade and financial transactions by Eurozone companies on the
Norwegian market and vice versa;
Euro/Australian Dollar: in relation to trade and financial transactions by Eurozone companies on the
Australian market and vice versa;
Turkish Lira/US Dollar: in relation to trade and financial transactions in US dollars by Turkish
companies on foreign markets and vice versa;
Euro/Singapore Dollar: in relation to trade and financial transactions by Eurozone companies on the
Singapore market and vice versa;