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

The current Group-wide risk management system was introduced in October 2006. We are continuously adapting it in line with current developments and regularly testing it 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 guideline that came into effect on 10 March 2009. In particular, the system used to classify risks and risk strategies was optimised, the terminology and categorisations were adapted, risk assessment and measurement methods were harmonised, risk reporting was redesigned and the risk management process was reorganised.

The purpose of the uniform Group risk management system is to identify risks in good time, evaluate them and communicate them appropriately. As an integrated, ongoing management and control tool, it supports the decision making that allows opportunities to be exploited in a structured way and the risks that arise to be consciously accepted or either mitigated or averted by taking countermeasures. Risks are assessed in terms of the extent of the potential damage or loss and their probability of occurrence.

Risk management responsibilities are allocated in line with the Group structure. As a general rule, each operating segment in the Demag Cranes Group manages the risks arising in its own area of responsibility. For this purpose, 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, which 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.

As part of the continuous improvement process, preparations are currently being made for the introduction of a software solution with which we aim to record and report risks even more efficiently.

The Demag Cranes Group’s risk early warning system complies fully with statutory requirements. The system was assessed by Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft, Düsseldorf, in the course of auditing the Financial Statements.