Opportunities and Risks Report

In order to effectively measure and manage identified opportunities and risks, we quantify these where appropriate in terms of probability and economic impact in the event they occur. Where possible, we use statistical methods to aggregate opportunities and risks into risk factors. This way, we achieve an overall view of opportunities and risks at a portfolio level, allowing us to take effective measures for risk management.

Overall assessment

• Significant opportunities and risks arise from overall economic developments, margin and exchange rate volatility
• No threat to continued existence of BASF

For 2020, we anticipate much slower global economic growth compared with the previous year. We expect global economic uncertainty to be extremely high and that growth will be significantly depressed by the drop in demand and production outages in connection with the coronavirus outbreak. Important opportunities and risks for our earnings are associated with uncertainty regarding market growth and the development of key customer industries, as well as margin volatility. An escalation of the trade conflicts between the United States and its trade partners and an even greater slowdown of the Chinese economy also pose significant risks. Such a development would have an even greater negative impact on demand for intermediate and investment goods. This would impact the emerging markets that export raw materials as well as the advanced economies. This is especially true for Europe. Further risks to the global economy arise from an escalation of geopolitical conflicts.

According to our assessment, there are no significant individual risks that pose a threat to the continued existence of the BASF Group. The same applies to the sum of individual risks, even in the case of a global economic crisis.

Ultimately, however, residual risks (net risks) remain in all entrepreneurial activities that cannot be ruled out, even by comprehensive risk management.