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CONSOLIDATED FINANCIAL REPORT | EXPLANATORY NOTES
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The potential impact shown above is solely attributable to increases and decreases in the fair value of
derivatives on strategic material prices which are directly attributable to changes in the prices themselves. It
does not refer to the impact on the income statement of the purchase cost of strategic materials.
[d] Credit risk
Credit risk is connected with trade receivables, cash and cash equivalents, financial instruments, and
deposits with banks and other financial institutions.
Customer-related credit risk is managed by the individual subsidiaries and monitored centrally by the Group
Finance Department. The Group does not have excessive concentrations of credit risk. It nonetheless has
procedures aimed at ensuring that sales of products and services are made to reliable customers, taking
account of their financial position, track record and other factors. Credit limits for major customers are based
on internal and external assessments within ceilings approved by local country management. The utilisation
of credit limits is periodically monitored at local level.
During 2015 the Group had a global insurance policy in place to provide coverage for part of its trade
receivables against any losses.
As for credit risk relating to the management of financial and cash resources, this risk is monitored by the
Group Finance Department, which implements procedures intended to ensure that Group companies deal
with independent, high standing, reliable counterparties. In fact, at 31 December 2015 (like at 31 December
2014) almost all the Group's financial and cash resources were held with investment grade counterparties.
Credit limits relating to the principal financial counterparties are based on internal and external assessments,
within ceilings defined by the Group Finance Department.
[e] Liquidity risk
Prudent management of the liquidity risk arising from the Group's normal operations involves the
maintenance of adequate levels of cash and cash equivalents and short-term securities as well as ensuring
the availability of funds by having an adequate amount of committed credit lines.
The Group Finance Department uses cash flow forecasts to monitor the projected level of the Group's
liquidity reserves.