Risk report

The effects of the financial and economic crisis are continuing to impact ThyssenKrupp's business activities. Our systematic and efficient risk management system helps contain and manage these risks. There are no risks threatening the existence of the Company. We are countering the economic risks in the markets of importance to us with an extensive action program to reduce costs and increase efficiency in all areas of the Group.

As a result of the financial crisis, the focus of attention has shifted increasingly to financial risks such as liquidity and credit risks. 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 March 31, 2010 the Group had €9.4 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 therefore manage them with particular care as part of our business policy. Financial instruments used for financing are concluded within specified risk limits only with counterparties of very 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.

In our assessment the risk of an economic setback is not over, so the operating risks for our business going forward remain high. The substantial increases on the procurement markets for iron ore and coking coal, which affect our steel activities, are part of this. To secure our competitiveness we are taking extensive measures – above all adjusting our selling prices to increased purchasing prices – to respond to the enormous price rises and the move from annual to quarterly contracts planned by the raw material suppliers. In the Marine Systems business area uncertainties continue to exist in connection with the negotiations with the Greek customer on outstanding payments. Negative effects on our financial position and earnings cannot be excluded.

The Group's worldwide presence and longstanding customer relationships in various markets make us less dependent on individual sales markets and sectors, and helps moderate falls in demand.

Thanks to our committed and competent employees ThyssenKrupp is succeeding in mitigating the current risks in the various areas of the Group. Other 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 07.