The active and transparent management of the various risks within the operating segments is a key tool for ensuring the Demag Cranes Group’s corporate success. The integrated analysis and management of earnings-related risk factors and going-concern risks requires coordinated Group-wide planning, reporting, financial control and early warning systems and processes.

Our existing Group-wide risk management system was introduced in October 2006. It is continuously adapted in line with current developments and regularly tested for effectiveness. In financial year 2007/2008, audit firm KPMG conducted an external analysis of our risk management system, providing the Demag Cranes Group with valuable insights for its ongoing development. In financial year 2008/2009, these were translated into a Group-wide risk management corporate policy that came into effect on 10 March 2009. In financial year 2009/2010, as part of the continuous improvement process, we introduced a software solution with which we are able to record and report risks even more efficiently.

The purpose of the uniform Group risk management system is to identify risks in good time, assess them and communicate them appropriately. As an integrated, ongoing management and control tool, it supports the decision making that allows the risks that arise to be consciously accepted or either mitigated or averted by taking countermeasures. Risks are assessed and classified in terms of the extent of the potential damage or loss and their probability of occurrence. The specific risk management processes are set out in the risk management corporate policy in effect since March 2009.

Risk management responsibilities are allocated in line with the Group structure. The diagram provides an overview. As a general rule, risk managers at Group member companies and associcated companies and at Group headquarters manage the risks arising in their area of responsibility. Each segment has a risk controller, who supports the risk management process at segment level and checks the data for plausibility. At Group level, a central risk controller has overall responsibility for preparing the Group risk report and coordinating the risk management process. All segment risks that may accumulate at Group level are recorded and managed centrally. Interim reports are prepared by way of a standardised, two-step reporting process at Group and segment level on a quarterly basis and immediately if risks materialise or damage is incurred. The most senior decision-making body is the risk committee headed by the Chief Financial Officer. This committee uses the documentation and communications processes in place to ensure that the responsible decision makers and in particular the Management Board and Supervisory Board of Demag Cranes AG are informed regularly and in good time about risk factors that could materially affect the Company’s business development.