31.2. Credit and default risk

The credit and default risk arising from financial assets involves the risk of default by counterparties, and therefore comprises at a maximum the amount of the claims under carrying amounts receivable from them and the irrevocable credit commitments. The maximum potential credit and default risk is reduced by collateral held and other credit enhancements in the amount of €59,237 million (previous year: €53,159 million). The collateral held relates solely to financial assets carried at amortized cost and mainly serves to secure financial services receivables and trade receivables. Collateral comprises vehicles and assets transferred as security, as well as guarantees and real property liens. The risk arising from nonderivative financial instruments is also accounted for by recognizing bad debt losses. Cash and capital investments and derivatives are only entered into with prime-rated national and international counterparties. Risk is additionally limited by a limit system based primarily on credit assessments by the international rating agencies and on the equity base of the counterparties concerned.

There were no material concentrations of risk in the past fiscal year due to the global allocation of the Group’s business activities and the resulting diversification.

There are no past due financial instruments measured at fair value in the Volkswagen Group. In fiscal year 2011, marketable securities measured at fair value with a cost of €73 million were individually impaired. In the previous year, no marketable securities measured at fair value were individually impaired.

The Volkswagen Group performs a credit assessment of borrowers in all loan and lease agreements, using scoring systems for the high-volume business and rating systems for corporate customers and receivables from dealer financing. Receivables rated as good are contained in risk class 1. Receivables from customers whose credit rating is not good but have not yet defaulted are contained in risk class 2.

Collateral that was accepted for financial assets in the current fiscal year was recognized in the balance sheet in the amount of €86 million (previous year: €90 million). This mainly relates to vehicles.