2005-2006 Financial Statements and Management Report

FINANCIAL STATEMENTS AND MANAGEMENT REPORT Compensation report/Risk report
RISK REPORT
Increasing corporate value, securing financial independence and making provision for individual
risks are the key elements of ThyssenKrupp’s risk policy. In the year under review our risk
management system ensured that the risks were contained and the future viability of the
enterprise is secure.
RISK POLICY AND MANAGEMENT: AIMED AT INCREASING CORPORATE VALUE
The Group’s risk policy is aimed at systematically and continuously increasing corporate value and
achieving the mid-term financial key performance targets. The name and reputation of the ThyssenKrupp
Group and the “ThyssenKrupp” brand are key priorities for the Group.
We accept reasonable and manageable risks the more they are associated with building and utilizing
the core competencies of the Group. The opportunities they present must provide an appropriate increase
in value. Risks connected with support processes are transferred to other risk carriers, provided this is
economically expedient. Risks not connected with core and/or support processes are not accepted. Overall
the aggregate risk volume must not exceed the risk coverage potential available at ThyssenKrupp ag.
Apart from this, the Group has a code of conduct which is set out in policies and other directives,
compliance with which is supported by training and monitoring measures. Speculative transactions or
other measures of speculative character are inadmissible. Our conduct toward suppliers, customers
and society is marked by fairness and a sense of responsibility.
Efficient risk management system
The Executive Board of ThyssenKrupp ag has installed a systematic and efficient risk management
system. Direct responsibility for early identification, control and communication of risks lies with the
operating management of the risk holder; responsibility for monitoring lies with the next highest level.
Under the risk management system, the occurrence, status and significant changes of major risks
are communicated by the Group companies bottom up, in line with tiered threshold values. The segments
inform the Executive Board of ThyssenKrupp ag about the current risk situation on a bi-weekly
basis. In addition, risks occurring at short notice and urgent risks with an impact on the entire Group
are communicated outside the normal reporting channels directly to the responsible offices of ThyssenKrupp
ag.
The adherence of the Group companies to the risk management system and their risk control measures
were examined by external and internal auditors in Germany and abroad. The findings made serve to
further improve early risk identification and control.
Risk transfer controlled on a Groupwide basis
The central service provider Risk and Insurance Services GmbH controls the transfer of risks to insurers
using global insurance programs in coordination with the Executive Board of ThyssenKrupp ag. To counter
the risk of excessive deductibles, especially in the area of property insurance, the Group regularly prepares
and evaluates risk and damage analyses. Work groups were also formed to develop joint and
binding risk prevention standards and monitor adherence to these in regular audits. In association with
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EARLY IDENTIFICATION AND MANAGE-
MENT OF RISKS ARE IMPORTANT ELE-
MENTS OF THYSSENKRUPP’S SYSTEM.