Risk report

ThyssenKrupp remains exposed to the risks from the after-effects of the financial and economic crisis. Our systematic and efficient risk management tools contain and manage these risks for our business activities. There are no risks threatening the existence of the Company. We continue to rigorously implement our extensive action program to reduce costs and increase efficiency in all areas of the Group.

In the wake 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, our financing for this and next fiscal year is on a secure foundation. At June 30, 2010 the Group had €8.5 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 who have 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 operating activities we continue to see risks of an economic setback. In particular the price increases for iron ore and coking coal represent risks going forward for our steel activities. To secure our competitiveness we are responding to the huge price increases with correspondingly adjusted selling prices.

In the Marine Systems business area the negotiations with the Greek customer on outstanding payments are not yet complete, so negative effects on our financial position and earnings still cannot be ruled out.

We do not see any major risks from the start of production of our steel activities in North and South America. The expansion of our global presence with good and long-standing customer relationships in the markets relevant to our business activities will contribute to making us less dependent on individual sales markets and sectors and help moderate falls in demand.

The commitment and skills of our employees reduce risks in the various areas of the Group. Risks such as bad debt and changes in political and regulatory conditions are countered by continuous monitoring. Beyond this, the detailed information contained in the risk report of our 2008/2009 Annual Report is still valid.

We report on pending lawsuits, claims for damages and other risks in Note 7.