Engineering

Management report on the Group
2.7 Management report on the Group Expected developments and associated opportunities and risks
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Risk transfer by central service provider
As central service provider, ThyssenKrupp Risk and Insurance Services again handled the Groupwide
transfer of risks to insurers in 2010/2011. The scope and structure of insurance cover is determined on the
basis of risk assessments in which insurable risks at the Group companies are identified, evaluated and
reduced or removed through asset-specific protection plans. Depending on the Group’s risk-bearing ability,
we agree appropriate deductibles for individual classes of insurance.
To keep risk prevention at a sustainable and appropriately high level, binding standards are in place for all
Group companies. These standards were developed by experts from all areas of the Group under the
leadership of ThyssenKrupp Risk and Insurance Services and are updated on an ongoing basis. Internal and
external auditors regularly check compliance with these standards.
To limit the risk of insurer insolvency, we spread the risk over numerous insurers taking into account the
ratings given to these insurers by recognized agencies.
Financial risks
Central responsibilities of ThyssenKrupp AG as parent company include the coordination and management
of financial requirements within the Group and securing the financial independence of the Company as a
whole. To this end we optimize Group financing and limit the financial risks. Risks in the individual financial
risk areas are minimized through an ongoing process of monitoring and intensive controls.
Credit risk (default risk): We enter into financial instrument transactions in the financing area only with
counterparties who have a very high credit standing and/or are covered by a deposit guarantee fund.
Transactions are concluded only within specified counterparty risk limits. Outstanding receivables and
default risks in connection with supplies and services are constantly monitored by the Group companies; in
some cases they are additionally insured under commercial credit policies. The credit standing of key
account customers is monitored particularly closely.
Liquidity risk: To secure the solvency and financial flexibility of the Group at all times, we maintain longterm
credit facilities and cash funds on the basis of a multi-year financial planning system and a liquidity
planning system on a rolling monthly basis. The cash pooling system and external financings are
concentrated mainly on ThyssenKrupp AG and specific financing companies. We use the cash pooling
system to allocate resources to Group companies internally according to requirements.
Market risk: Various measures are used to mitigate or eliminate the risk of fluctuations in the fair values or
future cash flows from non-derivative or derivative financial instruments due to market changes. These
mainly include off-exchange-traded foreign currency forward contracts, interest-rate swaps, interestrate/foreign
currency derivatives and commodity forward contracts with banks and commercial partners. To
hedge against commodity price risks we also use exchange-traded futures. The use of derivative financial
instruments is extensively monitored, with checks being carried out on the basis of policies in the framework
of regular reporting.