Consolidated Financial Statements swaps and options, are utilized to minimize such risks. Such a strategy does not qualify for hedge accounting treatment. The Company also accounts for foreign currency derivatives, which are embedded in sale and purchase contracts. Cash flow hedges The Company’s operating units apply hedge accounting to certain significant forecast transactions and firm commitments denominated in foreign currencies. Particularly, the Company entered into foreign currency exchange contracts to reduce the risk of variability of future cash flows resulting from forecast sales and purchases as well as firm commitments. The risk mainly results from contracts denominated in US$ both from Siemens’ operating units entering into long-term contracts e.g. from the project business and from the standard product business. In fiscal 2023 and 2022, the risk is hedged against the euro at an average rate of 1.2780 €/US$ and 1.2293 €/US$ (forward purchases of US$), respectively, and 1.1027 €/US$ and 1.0258 €/US$ (forward sales of US$), respectively. As of September 30, 2023, and 2022, the hedging transactions have an average remaining maturity until 2028 and 2027 (forward purchases of US$) as well as 2024 and 2023 (forward sales of US$), respectively. Included are Siemens’ foreign currency forward contracts, entered into in fiscal 2021, to hedge foreign currency risks relating to US$10 billion (€10 billion) bonds granted to Siemens Healthineers, through which a synthetic Euro financing structure is achieved. It factually, also turns interest into € with volume weighted average interest rates of currently about 0.7% and 0.3%, respectively, in fiscal 2023 and 2022. Interest rate risk management Derivative financial instruments not designated in a hedging relationship Interest rate risk management uses derivative financial instruments under a portfolio-based approach to manage interest risk actively. The approach does not qualify for hedge accounting. Gains and losses in connection with interest rate swap agreements are recorded in Other financial income (expenses), net. The interest rate risk management includes SFS business, for which the interest rate risk was formerly managed separately. Cash flow hedges of floating-rate commercial papers In September 2023, Siemens ended cash flow hedge accounting. Previously, Siemens applied cash flow hedge accounting to a revolving portfolio of floating-rate commercial papers of nominal US$200 million. Fair value hedges of fixed-rate debt obligations Under interest rate swap agreements outstanding in fiscal 2023 and 2022, the Company agreed to pay a variable rate of interest multiplied by a notional principal amount, and to receive in return an amount equal to a specified fixed rate of interest multiplied by the same notional principal amount. These interest rate swap agreements offset future changes in interest rates designated as hedged risk on the fair value of the underlying fixed-rate debt obligations. As of September 30, 2023, and 2022, the carrying amounts of €13,164 million and €10,718 million, respectively, of fixed-rate debt obligations are designated in fair value hedges, including €(876) million and €(973) million cumulative fair value hedge adjustments. Unamortized fair value hedge adjustments of €112 million and €169 million as of September 30, 2023 and 2022, respectively, relate to no longer applied hedge accounting. The amounts are amortized over the remaining term of the underlying debt, maturing until 2042. Carrying amount adjustments to debt of €(95) million and €1,273 million, respectively, in fiscal 2023 and 2022 are included in Other financial income (expenses), net; the related swap agreements resulted in gains (losses) of €74 million and €(1,236) million, respectively, in fiscal 2023 and 2022. Net cash receipts and payments relating to such interest rate swap agreements are recorded as interest expenses. The Company had interest rate swap contracts to pay variable rates of interest of an average of 3.00% and (0.86% as of September 30, 2023 and 2022, respectively and received fixed rates of interest (average rate of 1.81% and 1.07%, as of September 30, 2023 and 2022, respectively). The notional amount of indebtedness hedged as of September 30, 2023 and 2022 was €13,687 million and €11,719 million, respectively. This changed 33% and 26% of the Company’s underlying notes and bonds from fixed interest rates into variable interest rates as of September 30, 2023 and 2022, respectively. The notional amounts of these contracts mature at varying dates based on the maturity of the underlying hedged items. The net fair value of interest rate swap contracts (excluding accrued interest) used to hedge indebtedness as of September 30, 2023 and 2022 was €(844) million and €(959) million, respectively. NOTE 25 Financial risk management Increasing market fluctuations may result in significant earnings and cash flow volatility risk for Siemens. The Company’s operating business as well as its investment and financing activities are affected particularly by changes in foreign exchange rates and interest rates. In order to optimize the allocation of financial resources across Siemens' segments and entities, as well as to achieve its aims, Siemens identifies, analyzes and manages the associated market risks. The Company seeks to manage and control these risks primarily through its regular operating and financing activities and uses derivative financial instruments when deemed appropriate. Foreign currency exchange rate risk is quantified based on a sensitivity analysis. In order to quantify remaining market risks Siemens has implemented a system based on Value at Risk (VaR), which is also used for internal management of Corporate Treasury activities. The VaR figures are calculated based on historical volatilities and correlations of various risk factors, a ten day holding period, and a 99.5% confidence level. Actual results that are included in the Consolidated Statements of Income or Consolidated Statements of Comprehensive Income may differ substantially from VaR figures due to fundamental conceptual differences. While the Consolidated Statements of Income and Consolidated Statements of Comprehensive Income are prepared in accordance with IFRS, the VaR figures are the output of a model with a purely financial perspective and represent the potential financial loss, which will not be exceeded within ten days with a probability of 99.5%. Although VaR is an important tool for measuring market risk, the assumptions on which the model is based give rise to some limitations including the following. A ten day holding period assumes that it is possible to dispose of the underlying positions within this period. This may not be valid during continuing periods of illiquid markets. A 99.5% confidence level means that there is a 0.5% statistical 32