Opportunities and Risks

The goal of BASF’s risk management is to identify and evaluate opportunities and risks as early as possible and to take appropriate measures to seize opportunities and limit risks. The aim is to avoid risks that pose a threat to BASF’s continued existence and to make improved managerial decisions to create value. We understand opportunities and risks to be any event that can positively or negatively impact the achievement of our short-, medium- or long-term goals.¹

Where appropriate, we measure and manage opportunities and risks in terms of probability of occurrence and economic impact in the event they occur. Where possible, we use statistical methods to aggregate opportunities and risks into risk categories. In addition, we use a qualitative evaluation scale for opportunities and risks to assess both business and sustainability-related aspects that cannot be quantified. In this way, we achieve an integrated overall view, allowing us to prioritize economic and sustainability-related opportunities and risks at Group level by the highest economic impact or qualitative evaluation and probability as well as to take effective risk management measures.

Overall assessment

For 2025, we anticipate similar global economic growth as in 2024, albeit with slightly weaker growth on the chemicals market. General macroeconomic uncertainty will remain high.

A further escalation of current geopolitical conflicts could lead to disruptions in global supply chains and greater restrictions on the supply of energy, industrial raw materials and intermediates. The wars in Ukraine and the Middle East continue to pose significant risks for market development and the supply of raw materials.

There is also the risk of increases in U.S. tariffs and of backlashes among its trading partners. Higher inflation and interest rates could hamper demand. Due to our strategy of producing locally for the respective markets, the introduction of tariffs may also result in opportunities for the BASF Group. As uncertainties and volatilities are currently high, neither opportunities nor risks can be assessed yet.

Additional opportunities may arise in particular from stronger economic growth resulting from better macroeconomic development than assumed. Furthermore, material opportunities and risks for our earnings arise from margin volatility. Our assessment of opportunities and risks arising from the volatility of margins and currencies is based on forward-looking market-related assumptions in order to reflect the specific expectations of the market.

According to our assessment, there continue to be no significant individual risks that pose a threat to the continued existence of BASF SE or the BASF Group. The same applies to the sum of all risks (for more information, see (Consolidated) Sustainability Statement).

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