BASF Report 2023

Operational Opportunities and Risks

Market growth

The development of our sales markets is one of the strongest sources of opportunities and risks. For more details on our assumptions regarding short-term growth rates for the global economy, regions and key customer industries, such as the chemicals, automotive and construction sectors, see Economic Environment in 2024.

We also consider opportunities and risks caused by deviations in assumptions. Macroeconomic opportunities arise from an easing of geopolitical conflicts and the resulting increase in the supply of energy, industrial raw materials and other intermediate goods.

Increases in energy prices caused, for example, by the wars in Ukraine and the Middle East, and the even higher inflation rates resulting from this for manufacturer and consumer prices also pose a risk to the economy. Additional macroeconomic risks result from the escalation of geopolitical conflicts and a further intensification of the trade conflict between the United States, and, to some extent, the E.U. and China.

Weather-related influences can result in positive or negative effects on our business, particularly in the Agricultural Solutions segment.


Opportunities and risks for the BASF Group primarily result from higher or lower margins in the Chemicals and Materials segments in particular. Declining margins for a number of products and value chains could further increase pressure on margins. Additional shortages of raw materials could have both a negative and positive impact on margins. This would have a corresponding effect on our EBITDA.

The year’s average oil price for Brent crude was $82 per barrel in 2023, compared with $101 per barrel in the previous year. For 2024, we anticipate an average oil price of $80 per barrel.


We continuously enhance our products and solutions in order to remain competitive. We monitor the market and the competition, and try to take targeted advantage of opportunities. We mitigate increasing competitive risks, especially in the Agricultural Solutions division, as far as possible with suitable measures, such as increasing our competitiveness through the targeted promotion of innovations, for example in the area of sustainability, ongoing cost management and continuous process optimization.


Risks for us can arise from intensified geopolitical tensions, new trade sanctions, a lack of global coordination for stricter emission limits for production plants and stricter energy and chemicals legislation as well as a lack of acceptance of new technologies in the E.U. Furthermore, risks can also arise from regulatory delays in the expansion of capacities and infrastructure for electricity from renewable sources, low-emission hydrogen and the necessary CO2 infrastructure.

However, political measures could also give rise to opportunities. For example, we view opportunities around the world to increase energy efficiency and reduce greenhouse gas emissions as a strategic opportunity for increased demand for products such as our insulation foams for buildings, catalysts, battery materials for electromobility, or our solutions for wind turbines.

Procurement and supply chain

Operational risks in procurement are a key topic for BASF, as they can impact the company’s supply capability and therefore its competitiveness. Operational risks in procurement include disruptions and delays in the delivery of raw materials due to weather conditions, supplier insolvencies, quality concerns or geopolitical events, for example. To counter these risks, BASF relies on comprehensive risk assessment and control along the entire supply chain, on global competition and close cooperation with suppliers. We take far-reaching measures to avoid such risks or minimize their effects.


We try to prevent unscheduled plant shutdowns by adhering to high technical standards and by continuously improving our plants. We reduce the effects of an unscheduled shutdown on the supply of intermediate and end products through diversification within our global production Verbund.

In the event of a production outage – caused by an accident, for example – our global, regional or local emergency response plans and crisis management structures are engaged, depending on the scope of impact. Every region has crisis management teams on a local and regional level. They not only coordinate the necessary emergency response measures, they also initiate immediate measures for damage control and resumption of normal operations as quickly as possible.

Crisis management also includes dealing with extreme weather conditions such as hurricanes (for example, at the sites on the Gulf of Mexico in Freeport, Texas, and Geismar, Louisiana) or significantly elevated water temperatures in rivers due to extended heat waves, which limit the available cooling capacity. Appropriate precautions are taken at the sites in the case of a potential change in risk associated with climate change. For example, due to an increase in heat waves, we have implemented several measures at the Verbund sites in Ludwigshafen, Germany, and Geismar, Louisiana, in recent years to increase cooling capacity, such as expanding and optimizing the central recooling plants and optimizing cooling water flows. These optimization measures are designed to prevent production outages due to extreme heat waves.

Short-term risks from investments can result from, for example, technical malfunctions or schedule and budget overruns. We counter these risks with stringent project management and controlling.


We constantly monitor the market in order to identify possible acquisition targets and develop our portfolio appropriately. In addition, we collaborate with customers and partners to jointly develop new, competitive products and applications.

Acquisitions and divestitures entail both opportunities and risks. These arise in connection with the conclusion of a transaction, or it being completed earlier or later than expected. They relate to the regular earnings contributions gained or lost as well as the realization of gains or losses from divestitures if these deviate from our planning assumptions.


Due to BASF’s worldwide compensation principles, the development of personnel expenses is partly dependent on the amount of variable compensation, which is linked to the company’s success, among other factors. The correlation between variable compensation and the success of the company has the effect of minimizing risk. Another factor is the development of interest rates for discounting pension obligations. Furthermore, changes to the legal environment of a particular country can have an impact on the development of personnel expenses for the BASF Group. For countries in which BASF is active, we therefore constantly monitor the relevant developments in order to identify potential risks at an early stage and enable suitable measures to be taken.

Information technology

BASF employs a large number of IT systems. We use technologies such as artificial intelligence, big data and the Internet of Things to develop new business models, corporate concepts and strategies and to respond appropriately to changing customer behavior. The global cybersecurity team is tasked with protecting these IT systems and the data and business processes they handle. In a connected, ever-evolving world, the challenge of protecting BASF against attackers is becoming ever greater and more complex.

The threat environment has changed in recent years, as attackers have become better organized, use more sophisticated technology and have far more resources available. This development reflects the fact that internet-based cyberattacks are extremely lucrative: A variety of vulnerabilities in software and hardware products constantly provide new incentives to develop malware, and anonymization technologies make it almost impossible to trace and punish attacks.

A successful attack can, for example, negatively affect plant availability, delivery quality or the accuracy of our financial reporting. Unauthorized access to sensitive data, such as personnel records or customer data, competition-related information or research results, can result in legal consequences or jeopardize our competitive position. This could also cause monetary losses, a potential loss of reputation and even a loss of customers’ and partners’ confidence in the security of our products and services.

To minimize such risks, BASF uses globally uniform processes and systems to ensure IT availability and IT security, which are based on the recognized ISO 27001 standard. These include stable and redundantly designed IT systems, backup processes, virus and access protection, encryption systems, and integrated and standardized IT infrastructure, applications and processes. The systems used for information security are constantly tested, continuously updated, and expanded if necessary. In addition, our employees receive regular training on information and data protection. IT-related risk management is conducted using Group-wide regulations for organization and application, as well as an internal control system based on these regulations.

We employ modern security concepts to keep pace with advanced attackers. These range from efficient detection and professional response to defense against attacks and minimizing their potential impact. Strong cybersecurity alliances are also crucial here. BASF works closely with security authorities and security associations, for example as a founding member of the German Cyber Security Organization (DCSO) and the Cyber Security Sharing and Analytics (CSSA) platform in Berlin, Germany.

BASF has also established an information security management system and is internationally certified according to DIN EN ISO/IEC 27001:2017.


We constantly monitor current and potential legal disputes and proceedings, and regularly report on these to the Board of Executive Directors and Supervisory Board. In order to assess the risks from current legal disputes and proceedings and any potential need to recognize provisions, we prepare our own analyses and assessments of the circumstances and claims considered. In addition, in individual cases, we consider the results of comparable proceedings and, if needed, independent legal opinions. Risk assessment is particularly based on estimates as to the probability of occurrence and the range of possible claims. These estimates are the result of close cooperation between the relevant operating and service units together with Corporate Legal and Corporate Finance. If sufficient probability of occurrence is identified, we recognize a provision for the proceeding concerned. Should a provision be unnecessary, we continue to assess whether these litigations nevertheless represent a risk for the BASF Group’s EBITDA as part of general risk management.

We use our internal control system to limit risks from potential infringements of rights or laws. For example, we try to avoid patent and licensing disputes whenever possible through extensive clearance research. As part of our Group-wide Compliance Program, our employees receive regular training.


The recognized tax-related opportunities and risks only concern taxes that impact the BASF Group’s EBITDA in the short term. These arise when BASF has taken a position that differs from the opinion of a competent administrative authority. If a tax payment has already been made and could be reclaimed, we present this as an opportunity. Conversely, if a potential payment is outstanding in accordance with the administrative opinion, this is a risk. We primarily evaluate opportunities and risks with regard to their probability of occurrence and, if necessary, set up a provision for the relevant risk. If a provision is not necessary, we take this into account in determining EBITDA-relevant risks for the BASF Group.

Value chain
A value chain describes the successive steps in a production process: from raw materials through various intermediate steps, such as transportation and production, to the finished product.

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