ONE ROOF

Risk Report
• Group-wide early warning system
• Continual refinement of active risk
management measures
• Room to maneuver thanks to solid finances
• No risks to the company as a going concern
identified
Risk management at HOCHTIEF
Risk management at HOCHTIEF takes in all organizational
processes involved in advance detection of risks
as well as in identifying and initiating suitable action to
counter them. A risk is defined as any contingency with
a potential negative impact on the attainment of qualitative
or quantitative business goals, and in particular
on earnings and liquidity.
Risk management is a key success factor for HOCHTIEF
and as such forms an integral component of our management
system. To promote risk awareness throughout
the workforce, we nurture a continuously evolving
risk culture at all levels sustained by organizational processes,
IT systems and open communication.
HOCHTIEF Group early warning system
A Group-wide directive available to every employee
lays down standard procedures for risk management.
As a reaction to the financial crisis, we homed in more
specifically on liquidity risks in this directive. The divisions
supplement this Group directive with organizational
instructions geared to their specific circumstances.
Risk inventories and forecasts are compiled at all oper-
ating locations three times a year and the resulting in-
formation is aggregated to Group level. This approach
involves managers at all tiers of the corporate hierarchy.
All risks are assigned an impact, probability, category
and time-scale and are linked to action to be taken. In
complement to this quantitatively focused reporting,
HOCHTIEF also attaches utmost importance to open
discussion of risks by management. A key element of
our early warning system is therefore the Risk Management
Steering Committee made up of divisional and
corporate center representatives. This panel looks at
reported risks from the differing perspectives of the
❘ Information for our Shareholders ❘ ❘ Management Report ❘ ❘ Financial Statements and Notes ❘
divisions and the holding company. The Steering
Committee also coordinates and adopts binding counter-
measures. HOCHTIEF compiles the Steering Com-
mittee’s findings in a risk situation analysis in tabular
form. The commented analysis forms an integral part of
reporting and is finalized by the Executive Board. In addition,
the Investment Committee, which as a rule must
approve investments and equity stakes according to
uniform and recognized principles, contributes substantially
to risk avoidance.
Opportunities are inventoried simultaneously with risks
Group-wide and are included in planning and forecasting
reports submitted to the Executive Board. There is
no offsetting of risks and opportunities.
Overall risk
To assess overall Group risk, the expected individual
risk exposures are totaled and expressed as a fraction
of forecast or budgeted earnings. Expected risk exposures
are also aggregated at Group level for each division
and each risk category. Where individual risks are
interrelated, the situation is assessed by the Risk Management
Steering Committee and taken into account
when the risks are quantified. Changes in risk structure
are revealed by comparing current and previous risk
reports.
During the period under review, no risks were identified
that might cast doubt over the Group’s ability to continue
as a going concern. The company’s quantifiable
average overall risk stands at approximately 11 percent
of pretax profit. Identified liquidity risks can be covered
with existing holdings of cash funds. In light of this analysis,
there is no identifiable risk to the future results of operations,
cash flows and financial condition of HOCHTIEF
that might raise doubt about the entity’s ability to continue
as a going concern.
The global effects of the financial crisis have led to
changes in HOCHTIEF’s risk structure, as evidenced
by the sharply higher share of overall risk attributable to
market risks which, along with financial risk, account
for approximately 45 percent. Project and contract risk
make up a share of around 40 percent of overall risk,
followed by equity investment risks, which total nearly
Annual Report 2009 111