Risk management system

Within the framework of their global operations and as a result of increasingly intense competition, Daimler’s divisions are exposed to a large number of risks which are inextricably linked with their entrepreneurial activities. These entrepreneurial activities consist not least of identifying and utilizing opportunities to secure and enhance the Group’s competitiveness. Effective management and monitoring systems are combined into a uniform risk management system, meeting the requirements of applicable law and subject to continuous improvement, which is employed for the early detection, evaluation and management of risks.

The risk management system is integrated into the Group’s value-based management and planning system. It is an integral part of the overall planning, monitoring and reporting process in all relevant legal entities and central functions, and aims to systematically identify, assess, monitor and document risks. Risk assessment principally takes place for a two-year planning period. With the use of defined risk categories, risks are identified for the divisions and operating units, the major associated companies and the central departments, and are assessed regarding their probability of occurrence and possible extent of damage. Assessment of the possible extent of damage usually takes place in terms of the risks’ impact on EBIT. The communication and reporting of relevant risks are controlled by value limits set by management. The responsible persons also have the task of developing, and initiating as required, measures to avoid, reduce and hedge risks. Major risks and the countermeasures taken are monitored within the framework of a regular controlling process. As well as the regular reporting, there is also an internal reporting obligation within the Group for risks arising unexpectedly. The Group’s central risk management department regularly reports on the identified risks to the Board of Management and the Supervisory Board. The risk management system enables the Board of Management to identify key risks at an early stage and to initiate suitable countermeasures. By carrying out targeted audits, the Corporate Audit department monitors compliance with the statutory framework and with the Group’s internal guidelines as defined in the Risk Management Manual, and, if required, initiates appropriate action. In addition, the external auditors examine the system for the early detection of risks that is integrated into the risk management system in terms of its fundamental suitability for the early recognition of developments that could jeopardize the continued existence of the Group.

Entrepreneurial opportunities are not reported on within the risk management system, but are included in the annual operative planning and are followed up during the year in the context of the periodic corporate reporting. The divisions have direct responsibility for the early identification and utilization of opportunities. Within the framework of the strategy process, opportunities for further profitable growth are identified and included in the decision-making process.