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b)
Litigation and contingent liabilities
At 31 December 2015 and 2014, certain civil, labour, criminal and administrative lawsuits
had been filed against the Group companies, which were taken into account in estimating
potential contingent liabilities. Noteworthy, in view of their amount, were the lawsuits with
certain collection societies.
The directors of the Parent and its legal advisers do not expect any material liabilities
additional to those already recorded to arise from the outcome of the lawsuits in progress.
17. Risk management policy
The Group has a risk management and control system in place which is periodically reviewed
and updated based on the changes in the Group's business activities, the materialisation of
risks, legislative developments and the organisation's own development.
This risk management and control system is a tool to aid in management decision-making
and to effectively manage risks by identifying and implementing the controls and actions
plans, if any, that are necessary for all the identified risks, thereby improving the ability to
generate value and minimising any impact that may arise from the materialisation of any
risk.
Risk analysis and control affects all Group businesses and activities and also involves all
organisational units. It is therefore a corporate risk management and control system in which
the entire organisation actively participates and which is managed and overseen by the
Board of Directors, with the functions that are granted in this regard to the Audit Committee
and the coordination and participation of the Regulatory Compliance Committee and, in
particular, the Legal area in risk management and compliance controls, the Finance area in
relation to financial risks and the set of controls that compose the System of Internal Control
over Financial Reporting and, lastly, the Internal Audit and Process Control area in the
coordination and supervision of the overall functioning of the risk management system.
The Group has the tools and the organisation necessary to ensure the effectiveness of the
approved control procedures.
The Corporate Governance Report includes an extensive summary of the risk control
systems.
The main financial risks affecting the Group are as follows:
a) Credit risk
The Group does not have significant credit risk since the average customer collection period
is very short and guarantees are required for deferred payment sales. Cash placements are
made and derivative instruments are arranged with institutions of recognised solvency.
The advertising contract terms enable bank guarantees to be demanded prior to the launch
of advertising campaigns. Also, it should be noted that the Group does not have a significant
concentration of credit risk exposure to third parties and no noteworthy incidents arose in
2015. The percentage of past-due receivables at 31 December 2015 was 8.97%.
b) Liquidity risk
The Group’s liquidity policy is to arrange credit lines and short-term investments that are
sufficient to support its financial needs, on the basis of expected business performance.
These are all tied to floating interest rates (see Note 13).
c) Market risk (including interest rate and foreign currency risk)
Both the Group’s cash and its bank borrowings are exposed to interest rate risk, which could
have an adverse effect on financial profit or loss and cash flows. The Group's financing is