STARRAGTORNOS GROUP AG ANNUAL

Risk Management

Risk management A diligent handling of all strategic, financial and operational risks is a top priority for the board of Directors and the management board. StarragHeckert has a comprehensive process for the risk management, which is reviewed by the management board and the board of Directors on an annual basis. The management board appointed a risk manage- ment representative for the moderation and implementation of the risk management and assigned one responsible member of the management board to each risk area. In the annual risk review there is a diligent identification, assessment, analysis and evaluation of risks and appropriate measures are defined to reduce the risks. This information is docu- mented in a group wide risk matrix. The implementation of the measures is monitored by the risk management representative. In business processes with recurring risks the measures are integrated as process steps in the operative processes of the daily business. On an annual basis, the management board reports nature, extent and assessment of significant risks and the measures taken for risk minimization to the board of Directors. Risks in accounting and financial reporting are monitored and reduced by an adequate internal control system. Financial risk management The main risks occurring from the group’s financial instruments consist of credit risk, counterparty risk, foreign currency risk, interest rate risk and liquidity risk. Credit risk The credit risk is limited by the number and the geographical spread of customers’ receivables. In addition, it is limited by the adequate examination of the financial situation of customers before entering into a contract. mostly, customers make advance payments upon order acknowledgement. If appropriate, shipment only follows upon advance payment or letter of credit. The outstanding receivables are constantly monitored. Counterpary risk StarragHeckert mainly holds his cash equivalents as deposit or current account with major creditworthy banks. Generally these deposits have durations under three months. Deals with derivative financial tools are concluded with major financial institutes only. Foreign currency risk The StarragHeckert Group does not enter into business operations in foreign currencies which show an extraordinary high volatility. The foreign currency risk results mainly from sales and purchases in foreign curre