c. Credit Risks
Credit risks, or the risk of counterparties defaulting, are controlled by the application of credit approvals, limits and monitoring procedures. Where appropriate, the Group obtains guarantees from governmental export agencies or similar private institutions to reduce the risk of a counterpart defaulting. Furthermore there is no existent concentration of default risk due to high diversification of contract parties.
Credit risk associated with the investment of liquid funds and securities is limited by the fact that the Group works only with financial partners who can demonstrate sound creditworthiness.
For some financial assets and financial liabilities the Group has a legally enforceable right to set off. These amounts are only reported on a net basis. For all existing risks, valuation allowances are included, so that the Managing Board believes that no other credit risk will occur.
