Risk report

The effects of the financial and economic crisis are continuing to impact ThyssenKrupp's business activities in the new fiscal year. However, thanks to our systematic and efficient risk management system, these risks remain contained and manageable. There are no risks threatening the existence of the Company. We are continuing to respond to the economic risks in the markets of importance to us with an extensive action program aimed at sustainably cutting costs and enhancing efficiency in all areas of the Group.

Against the background of the financial crisis, financial risks such as liquidity and credit risks are an increasing focus of attention. ThyssenKrupp takes account of these risks and manages its liquidity requirements with foresight. Despite the difficult market environment, financing in fiscal 2009/2010 is on a secure foundation. At December 31, 2009 the Group had €9.9 billion in cash, cash equivalents and committed credit lines.

Credit risks (default risks) arise from the fact that the Group is exposed to possible default by a contractual party in relation to financial instruments, e.g. financial investments. In times of crisis, default risks take on greater significance; we are therefore managing them very carefully as part of our business policy. Financial instruments used for financing are concluded within specified risk limits only with counterparties of extremely good credit standing and/or who are covered by a deposit guarantee fund.

Further financial risks such as currency, interest rate and commodity price risks are reduced by the use of derivative financial instruments. Restrictive principles regarding the choice of counterparties also apply to the use of these financial instruments.

The risks to our operating business remain high, as there is still the danger of an economic setback. This applies above all to our Steel Europe and Stainless Global business areas and to our automotive supply and shipbuilding activities. We have introduced extensive measures to adjust to the new market conditions and safeguard our competitiveness.

In the Marine Systems business area there remains a risk that the very difficult negotiations with the Greek customer on outstanding payments may not be brought to a successful conclusion.

In the current market situation, our global presence and good, longstanding customer relations help make us less dependent on individual sales markets.

ThyssenKrupp's competent and motivated employees are helping mitigate the current risks in the various areas of the Group. Other business risks, such as bad debt and changes in political and regulatory conditions, are monitored continuously. Beyond this, the detailed information contained in the risk report in our 2008/2009 Annual Report is still valid.

We report on pending lawsuits, claims for damages and other risks in Note 6.