Management Report
11. Future Perspectives
11.1 Opportunity and Risk Report
11.1.1 Opportunity and Risk Management
Business operations necessarily involve opportunities and risks. Effective management of opportunities and risks is therefore a key factor in sustainably safeguarding a company’s value.
Managing opportunities and risks is an integral part of the corporate governance system in place throughout the Bayer Group, not the task of one particular organizational unit. Thus the organizational units are closely interlinked in this respect. Key elements of the opportunity and risk management system are the planning and controlling process, Group regulations and the reporting system.
At regular conferences held to discuss business performance, the opportunities and risks that are evaluated both qualitatively and quantitatively in determining the strategies of the strategic business entities and the regions are updated, and targets and necessary actions are agreed upon.
Opportunity management in the Bayer Group is based on the detailed observation and analysis of individual markets and the early recognition and evaluation of trends from which opportunities can be identified. Macroeconomic, industry-specific, regional and local trends are taken into account. It is the task of the subgroups and strategic business entities to make use of strategic opportunities arising in their respective markets. The strategic framework necessary for them to do this is set, and the necessary financing and liquidity ensured, at the Group level. Opportunity-based projects involving more than one subgroup are centrally coordinated and accounted for.
The principles of the Bayer Group’s risk management system are set forth in a directive published on the Group-wide intranet. The directive explains the fundamentals of risk management in compliance with the German Law on Corporate Supervision and Transparency and includes the principles for the early identification, communication and addressing of risks. These principles relate to the areas of statutory requirements, risk management policies at Bayer and risk management activities.
In the Bayer Group, risks are systematically and continuously identified, analyzed and documented in a database. Risks are defined as events and possible developments within or outside of the company that could jeopardize a sustained increase in enterprise value. Risk-relevant information is compiled at least quarterly and also on an ad hoc basis where necessary.
The documentation contains a description of the risk, an assessment of the extent of possible damage and the probability of occurrence, along with measures to monitor and counteract the risk.
Materiality limits for the subgroups and service companies are defined by the Bayer Group in consultation with the respective units. To transparently present risk issues at an early stage and allow potential risks to be countered in a timely manner, the risk documentation prescribes action thresholds that are well below the materiality limits.
The members of the Group Leadership Circle have unrestricted access to the risk database, which is mapped to the management information system.
Risk management at the Group level is assigned to the Chief Financial Officer. The subgroups, service companies and the units of the holding company have nominated persons responsible for risk management at the upper managerial level as well as risk management coordinators to ensure that an effective system for the early identification of risks is implemented and maintained. The risk management coordinators and specialists in the organizational units are responsible for the risk inventory, including the identification, evaluation and documentation of risks, and for explaining the risk strategy. The annual risk report to the Supervisory Board covers the risk management system, legal risks, compliance issues, the reports by Corporate Auditing and the report on the internal control system.
Corporate Auditing is responsible for coordinating the identification and documentation of risk areas throughout the Group and for enhancing the risk management system.
The effectiveness of the risk management system is monitored by Corporate Auditing at regular intervals. Corporate Auditing adopts a risk-based approach to audit planning. In addition, the external auditor assesses the early warning system as part of the annual financial statements audit and informs the Group Management Board and the Supervisory Board of the findings. These findings are taken into account as part of the continuous enhancement of our risk management system. The risk management system is monitored by the Supervisory Board, especially its Audit Committee.
11.1.2 Internal Control and Risk Management System for (Group) Accounting and Financial Reporting
(report pursuant to Sections 289 Paragraph 5 and 315 Paragraph 2 No. 5 of the German Commercial Code (HGB))
Bayer has an internal control and risk management system in place under which appropriate structures and processes for (Group) accounting and financial reporting are defined and implemented throughout the organization. This system is designed to guarantee timely, uniform and accurate accounting for all business processes and transactions. It ensures compliance with statutory regulations, accounting and financial reporting standards and the internal accounting directive, which is binding upon all the companies included in the consolidated financial statements. The relevance and consequences for the consolidated financial statements of any amendments to laws, accounting or financial reporting standards or other pronouncements are continually analyzed, and the Group directives and systems are updated accordingly.
Apart from defined control mechanisms such as system-based and manual reconciliation processes, the fundamental principles of the internal control system include the separation of functions and compliance with directives and operating procedures. The accounting and financial reporting process for the Bayer Group is managed by the Group Accounting and Controlling department of Bayer AG.
The Group companies prepare their financial statements either locally or using the Group’s shared service centers and transmit them with the aid of a data model that is standardized throughout the Group and based on the Group accounting directive. The Group companies are responsible for their compliance with the directives and procedures applicable throughout the Group and for the proper and timely operation of their accounting-related processes and systems. The employees involved in the accounting and financial reporting process for the consolidated financial statements of the Bayer Group and the financial statements of Bayer AG receive regular training, and the Group companies are supported by headquarters personnel throughout the process. As part of the process, measures are implemented that are designed to ensure the regulatory compliance of the consolidated financial statements. These measures serve to identify and evaluate risks, and to limit and monitor any risks that may be identified. For example, material new contractual relationships are systematically tracked and analyzed.
The consolidated financial statements are prepared centrally on the basis of the data supplied by the included subsidiaries. The consolidation, certain reconciliation operations and monitoring of the related time schedules and procedures are performed by a dedicated Group Financial Statements department. System-based controls are monitored by personnel and supplemented by manual inspection. At least one additional check by a second person is carried out at every level. Defined approval procedures must be observed at all stages in the accounting process. There is also a dedicated unit, separate from the financial statements preparation process, for clarification of specific accounting-related questions or particularly complex issues.
Bayer’s internal control system for financial reporting is based on the framework issued by COSO (Committee of the Sponsoring Organizations of the Treadway Commission). For IT processes, the COBIT (Control Objectives for Information and Related Technology) framework is used accordingly. The standards for the mandatory Group-wide internal control system (ICS) were derived from these frameworks, defined centrally and implemented by the Group companies. The management of each company is responsible for the implementation and oversight of the local ICS. All ICS-relevant business processes, together with the related risks and controls, are documented in a uniform and audit-proof manner in a Group-wide system and clearly mapped in a central IT system at the Group level.
The role of Corporate Auditing includes verifying the accuracy of the accounting at German and foreign companies, especially with regard to the following aspects:
- compliance with statutory regulations, directives of the Board of Management, and other internal regulations and procedures
- formal and substantial correctness of accounting and the corresponding reporting
- functioning and effectiveness of the internal control system to protect the company against financial loss
- correctness of working procedures and adherence to economic principles.
Bayer AG has a standardized, Group-wide procedure to monitor the efficacy of the accounting-related internal control system. This procedure is systematically aligned to the potential risks of misreporting in the consolidated financial statements and is based on the strict requirements of the U.S. capital market set forth in Section 404 of the Sarbanes-Oxley Act.
The appraisal of the effectiveness of the accounting-related ICS is based on a cascaded self-assessment system that starts with the persons directly involved in the process, then involves the principal responsible managers and ends with the Group Management Board. Corporate Auditing performs an independent review of random samples of these self-assessments.
The Group Management Board has examined the effectiveness of the internal control system for accounting and financial reporting on the basis of the COSO framework and its criteria. The examination confirmed the functionality of this internal control system for fiscal 2010. The effectiveness of the internal control system is monitored by the Audit Committee of the Bayer AG Supervisory Board in compliance with the German Accounting Law Modernization Act, which came into effect in May 2009. However, it should be noted that an internal control system, irrespective of its design, cannot provide absolute assurance that material misstatements in the accounting will be avoided or identified.
11.1.3 Opportunities
As an international enterprise, Bayer is exposed to a wide variety of developments in the various national and international markets in which it operates in its three business areas. Different potential risks and opportunities arise within the existing operational framework according to the business performance described in this report and the company’s overall situation.
We aim to take maximum advantage of the opportunities that present themselves in our various fields of activity. We continuously evaluate potential additional opportunities in all areas as an integral part of our strategy, which is described in detail in Chapter 11.2
“Strategy.” Research and development present major opportunities, and we are working continuously to find new products and improve existing ones. These activities are presented in detail in Chapter 8
“Research and Development.” Various risks described in the following – particularly financial risks – are counterbalanced by the opportunities that could result from positive trends.
11.1.4 Risks
Risk exposure
As a global company with a diverse business portfolio, the Bayer Group is exposed to numerous risks. We have purchased insurance coverage – where it is available on economically acceptable terms – in order to minimize related financial impacts. The level of this coverage is continuously re-examined.
Significant risks for the Bayer Group are outlined in the following sections. The order in which the risks are listed is not intended to imply any assessment as to the likelihood of their materialization or the extent of any resulting damages.
Legal risks
We are exposed to numerous legal risks from legal disputes or proceedings to which we are currently a party or which could arise in the future, particularly in the areas of product liability, competition and antitrust law, patent disputes, tax assessments and environmental matters. The outcome of any current or future proceedings cannot be predicted. It is therefore possible that legal or regulatory judgments could give rise to expenses that are not covered, or not fully covered, by insurers’ compensation payments and could significantly affect our revenues and earnings.
Legal proceedings currently considered to involve material risks are described in
Note [32] to the consolidated financial statements.
Industry-specific risks
Pharmaceutical product prices are subject to regulatory controls in many markets. Some governments intervene directly in setting prices. In addition, in some markets major purchasers of pharmaceutical products have the economic power to exert substantial pressure on prices. Price controls, as well as price pressure from generic manufacturers as a result of government reimbursement systems favoring less expensive generic pharmaceuticals over brand-name products, diminish earnings from our pharmaceutical products and could potentially render the market introduction of a new product unprofitable. We expect the current extent of regulatory controls and market pressures on pricing to persist or increase.
Regulatory changes are continuously monitored, especially in our key markets. If necessary, we adjust our business plans according to the significance of governmental intervention.
Sales of the Bayer Group are subject to seasonal fluctuations. This applies particularly in the CropScience business, which is also affected by factors such as weather conditions. The performance of our MaterialScience subgroup is affected by cyclicality in customer industries. A downturn in the business cycle, characterized by weak demand and overcapacities, may lead to price pressure and more intense competition.
The early identification of trends in the economic or regulatory environment and active portfolio management are important elements of our business management. Our analyses of the global economy and forecasts of medium-term economic development are documented in detail on a quarterly basis and used to support operational business planning. However, even our detailed analyses may not ensure that a massive economic downturn of the kind that occurred in 2008 and 2009 can be predicted.
Where it appears strategically advantageous, we may acquire a company or part of a company and combine it with our existing business. The amount of goodwill and other intangible assets reflected in the Bayer Group’s consolidated statement of financial position has increased significantly in recent years as a result of acquisitions. Failure to successfully integrate a newly acquired business or unexpectedly high integration costs could jeopardize the achievement of quantitative or qualitative targets, such as synergies, and adversely impact earnings.
The integration processes associated with our acquisitions are steered by integration teams. Appropriate resources are provided to support the integration processes.
Product development risks
The Bayer Group’s competitive position, sales and earnings depend significantly on the development of commercially viable new products and production technologies. We therefore devote substantial resources to research and development. Because of the lengthy development processes, technological challenges, regulatory requirements and intense competition, we cannot assure that all of the products we will develop in the future or are currently developing will actually reach the market and achieve commercial success as scheduled or at all.
Furthermore, adverse effects of our products that may be discovered after regulatory approval or registration despite thorough prior testing may lead to a partial or complete withdrawal from the market, due either to regulatory actions or our voluntary decision to stop marketing a product. Also litigations and associated claims for damages due to negative effects of our products may materially diminish our earnings.
To ensure an effective and efficient use of resources in research and development, the Bayer Group has implemented an organizational structure and process organization comprising functional departments, working groups and reporting systems that monitor development projects.
Regulatory risks
Our life science businesses, in particular, are subject to strict regulatory regimes relating to the testing, manufacturing and marketing of many of our products. In some countries regulatory controls have become increasingly demanding. We expect this trend to continue, particularly in the United States and the European Union. Increasing regulatory requirements, such as those governing clinical or (eco-)toxicological studies, may increase product development costs and/or delay product (re-)registration.
To counter risks arising from legal or other requirements, we make our decisions and engineer our business processes on the basis of comprehensive legal advice provided both by our own experts and by acknowledged external specialists. Projects have been initiated to coordinate the implementation of new regulatory controls and mitigate any negative implications for the business.
Patent risks
A large proportion of our products, mainly in our life science businesses, is protected by patents. We are currently involved in lawsuits to enforce patent rights in our products. Generic manufacturers and others attempt to contest patents prior to their expiration. Sometimes a generic version of a product may even be launched “at-risk” prior to the issuance of a final patent decision.
When a patent defense is unsuccessful, or if one of our patents expires, our prices are likely to come under pressure because of increased competition from generic products entering the market. Details of related litigation are provided as part of the description of legal risks in
Note [32] to the consolidated financial statements.
In some areas of activity we may also be required to defend ourselves against charges that products infringe patent or proprietary rights of third parties. This could impede or even halt the development or manufacturing of certain products or require us to pay monetary damages or royalties to third parties.
Our life science businesses, in particular, have a comprehensive product life-cycle management system in place. In addition, our legal department, in conjunction with the relevant functional departments, regularly reviews the patent situation. Potential infringements of our patents by other companies are carefully monitored so that legal action can be taken if necessary.
Production, procurement market and environmental risks
Production capacities at some of our manufacturing facilities could be adversely affected by, for instance, technical failures, natural disasters, regulatory rulings or disruptions to supplies of key raw materials or intermediates, as in the case of dependence on a single source for critical materials. This applies particularly to our biotech products because of the highly complex manufacturing processes. If in such cases we are unable to meet demand by shifting sufficient production to other plants or drawing on our inventories, we may suffer declines in sales revenues.
The supply of strategically important raw materials is ensured wherever possible through long-term contracts and/or by purchasing from multiple suppliers. Furthermore, all stages of our production processes and our material inputs are continuously monitored by the respective expert function within the company.
Moreover, the manufacturing of chemical products is subject to risks associated with the production, filling, storage and transportation of raw materials, products and wastes. These risks may result in personal injury, property damage, environmental contamination or business interruptions and liability for compensation payments.
Furthermore, the possibility of accidental cross-contamination among our crop protection products or the presence of unintended trace amounts of genetically modified organisms in agricultural products and/or foodstuffs cannot be completely excluded.
We address product and environmental risks by way of suitable quality assurance measures. An integrated quality, health, environmental and safety management system ensures process stability. In addition, we are committed to the international Responsible Care initiative of the chemical industry, are driving forward our sustainable development and climate program and report regularly on our sustainability management, which also covers the areas of environmental protection and safety.
IT risks
Business and production processes and the internal and external communications of the Bayer Group are increasingly dependent on information technology systems. Major disruptions or failure of global or regional business systems may result in loss of data and/or impairment of business and production processes.
The foundations for a continuous and sustainable IT risk management system have been laid by establishing a comprehensive organization, issuing regulations that define the relevant roles and responsibilities, and implementing a periodic reporting system. For this purpose a committee has been established at the Group level to resolve upon the basic strategy, architecture and IT security features, which are implemented accordingly by the subgroups and service companies in consultation with this central organization. Technical precautions such as data recovery and continuity plans have been established together with our internal IT service provider to address this risk.
Risk to pension obligations from capital market developments
The Bayer Group has obligations to current and former employees related to pensions and other post-employment benefits. Changes in relevant valuation parameters such as interest rates, mortality and rates of increases in compensation may raise the present value of our pension obligations. This may lead to increased pension costs or diminish stockholders’ equity due to actuarial losses being recognized directly in equity. A large proportion of our pension and other post-employment benefit obligations is covered by plan assets including fixed-income securities, shares, real estate and other investments. Declining or even negative returns on these investments may adversely affect the future fair value of plan assets. This in turn may diminish equity, and/or it may necessitate additional contributions by the company. Further details are given in
Note [25] to the consolidated financial statements.
We address the risk of market-related fluctuations in the fair value of our plan assets through prudent strategic investment, and we constantly monitor investment risks in regard to our global pension obligations.
Financial risks
Management of financial and commodity price risks
As a global enterprise, Bayer is exposed in the normal course of business to credit risks, liquidity risks and various market price risks that could materially affect its net assets, financial position and results of operations.
It is company policy to use derivatives to minimize or eliminate the market price risks associated with operating activities and the resulting financing requirements. Derivatives are used almost exclusively to hedge realized or forecasted transactions. The use of derivatives is subject to strict internal controls based on centrally defined mechanisms and uniform guidelines. The derivatives used are mainly over-the-counter instruments, particularly forward exchange contracts, foreign currency options, interest rate swaps, cross-currency interest rate swaps, commodity swaps and commodity option contracts concluded with banks. We set counterparty limits for such banks depending on their creditworthiness.
The various risks associated with financial instruments are outlined below together with the relevant risk management systems.
Credit risks
Credit risks arise from the possibility of the value of receivables or other financial assets being impaired because counterparties cannot meet their payment or other performance obligations. Since the Bayer Group does not conclude master netting arrangements with its customers, the total of financial assets represents the maximum credit risk exposure.
To effectively manage the credit risks from trade receivables, Bayer has put in place a standardized risk management system, which is the subject of a Group directive. Customers’ creditworthiness is regularly analyzed; these receivables are partly secured. Credit limits are set for all customers. All credit limits for debtors where total exposure is €10 million or more are evaluated by our operational credit management and submitted to the Group’s Central Financial Risk Committee.
To minimize credit risks, financial transactions are only conducted with banks and other partners of first-class credit standing in line with predefined exposure limits. All risk limits are based on methodical models. Adherence to the risk limits is continuously monitored.
Country risks relating to trade receivables and intra-Group loans are continuously monitored, systematically evaluated and centrally managed.
Liquidity risks
Liquidity risks – those arising from the possibility of not being able to meet current or future payment obligations because insufficient cash is available – are centrally managed in the Bayer Group. Sufficient liquid assets are held to meet all of the Group’s payment obligations when they fall due, thereby ensuring solvency at all times. Payment obligations result both from operating cash flows and from changes in current financial liabilities. In addition, a reserve is maintained for unbudgeted shortfalls in cash receipts or unexpected disbursements. For this purpose, budget deviation analyses are performed on the basis of historical time series, adjusted for variations in business structure. The liquidity reserve is then determined which, with a defined probability, will cover a negative deviation from budgeted cash flows. The size of this reserve is regularly reviewed and adjusted as necessary to current conditions. Liquid assets are kept mainly in the form of overnight and term deposits. Credit facilities also exist with banks. These include, in particular, a €3.5 billion syndicated credit facility, which is undrawn.
We intend to service the bonds maturing in 2011 out of liquidity and free operating cash flow.
Market risks
Market risks relate to the possibility that the fair value or future cash flows of financial instruments may fluctuate due to variations in market prices. Market risks include currency, interest rate and other price risks, especially commodity price risks.
Sensitivity analysis is a widely used risk measurement tool that allows our management to make judgments regarding the potential loss in future earnings, fair values or cash flows of market-risk-sensitive instruments resulting from one or more selected hypothetical changes in interest rates, foreign currency exchange rates, commodity prices or other relevant market rates or prices over a selected period of time. We use sensitivity analysis because it provides reasonable risk estimates using straightforward assumptions (for example, an increase in interest rates). The risk estimates we provide below assume:
- a simultaneous, parallel shift in foreign exchange rates in which the euro depreciates against all currencies by 10%,
- a parallel shift of 100 basis points in the interest rate yield curves of all currencies, and
- a simultaneous 20% decline in the prices of all the commodities underlying the derivatives we hold.
We use market information and additional analytics to manage our risk exposure and mitigate the limitations of our sensitivity analysis. We have found sensitivity analysis to be a useful tool in achieving some of our specific risk management objectives. Sensitivity analysis offers an easy-to-understand risk exposure estimate that allows an approximation of the effect that changing market conditions could have on our business. It also allows our management to take the necessary steps to address such risks.
We continually refine our risk measurement and reporting procedures. This includes periodically re-examining the underlying assumptions and parameters utilized.
The sensitivity analyses included in the following sections of this Risk Report present the hypothetical loss in cash flows of financial instruments and derivatives that we held as of December 31, 2010 and December 31, 2009. The range of sensitivities that we chose for these analyses reflects our view of the changes in foreign exchange rates, commodity prices and interest rates that are reasonably possible over a one-year period.
Currency risks
Since the Bayer Group conducts a significant portion of its operations outside the eurozone, fluctuations in currency exchange rates can materially affect earnings. Currency risks from financial instruments exist with respect to receivables, payables, cash and cash equivalents that are not denominated in a company’s functional currency. In the Bayer Group these risks are particularly significant for the U.S. dollar, the Japanese yen, the Canadian dollar and the Chinese renminbi.
Currency risks are identified, analyzed and managed centrally and systematically. The scope of hedging is evaluated regularly and defined in a corporate directive. Recorded foreign currency operating items, receivables and payables are normally fully hedged.
The anticipated foreign currency exposure from forecasted transactions in the next twelve months is hedged on a basis agreed between the Group Management Board, the central finance department and the operating units. A significant proportion of contractual and foreseeable currency risks is hedged, mainly through forward exchange contracts and currency options.
The Group Management Board has provided clear guidance on how to limit and monitor cash flow risks that result from this approach.
We applied a hypothetical adverse scenario in which the euro simultaneously depreciates by 10% against all other currencies compared with the year-end exchange rates. Under this scenario the estimated hypothetical loss of cash flows from derivatives and non-derivatives as of December 31, 2010 would be €279 million (2009: €188 million). Of this €279 million, €120 million is related to the U.S. dollar, €41 million to the Japanese yen, €30 million to the Canadian dollar, €34 million to the Chinese renminbi and €54 million to other currencies. Of the €279 million estimated hypothetical loss of cash flow, €296 million results from derivatives used to hedge anticipated exposure from planned sales denominated in foreign currencies. Such transactions qualify for hedge accounting, and the respective changes in value are recognized in equity under other comprehensive income (OCI). The offsetting position of €17 million is primarily attributable to account balances in foreign currencies and unhedged currency derivatives embedded in supply contracts. The impact of exchange-rate fluctuations on our anticipated sales in foreign currencies is not included in this calculation.
Interest rate risks
The Bayer Group’s interest rate risks arise primarily from financial assets and liabilities with maturities exceeding one year. In the case of fixed-rate financial instruments, such as fixed-rate bonds, the risk of fluctuations in capital-market interest rates results in a fair value risk because the fair values fluctuate as a function of interest rates. In the case of floating-rate instruments, a cash flow risk exists because interest payments could increase in the future.
Interest rate risks in the Bayer Group are analyzed centrally and managed by the central finance department. This is done in line with the duration set by the Board of Management, which implicitly also includes the ratio of fixed-rate to floating-rate debt. The duration is subject to regular review. Derivatives – mainly interest rate swaps, cross-currency interest rate swaps and interest options – are employed to preserve the target structure of the portfolio.
Financial debt including derivatives amounted to €11,767 million as of December 31, 2010 (December 31, 2009: €12,858 million). The sensitivity analysis was performed on the basis of our floating-rate debt position at year end 2010, taking into account the interest rates relevant to our liabilities in all principal currencies. A hypothetical increase of 100 basis points, or 1 percentage point per annum, in these interest rates (assuming constant currency exchange rates) as of January 1, 2010 would have raised our interest expense for the year ended December 31, 2010 by €45 million (2009 based on liabilities at year end 2009: €58 million).
Other price risks (especially commodity price risks)
The Bayer Group requires significant quantities of petrochemical feedstocks and energy for its various production processes. The prices of these inputs may fluctuate considerably depending on market conditions. As in the past, there may be times when it is not possible for us to pass on increased raw material costs to customers through price adjustments. This applies particularly to our MaterialScience business.
We have addressed this risk by concluding long-term contracts with multiple suppliers. The procurement departments of the subgroups are responsible for managing these price risks on the basis of internal directives and centrally determined limits, which are subject to constant review. The operation of our production facilities requires large amounts of energy, mostly in the form of electricity and steam. To minimize our exposure to energy price fluctuations, we aim for a balanced diversification of fuels for steam production and a mix of external procurement and captive production for power generation.
We applied a hypothetical adverse scenario in which all commodity and energy prices simultaneously decrease by 20%. Under this scenario the estimated hypothetical loss of cash flows from derivatives as of December 31, 2010 would be €8 million (2009: €31 million). Of this €8 million, €0 million would be directly disclosed in the income statement and €8 million would be recognized as a value adjustment in equity under other comprehensive income (
OCI) according to hedge accounting rules. In considering sensitivities for commodity futures and commodity option contracts, we have made a small allowance for the fact that forward rates are less volatile than spot rates. The stated long-term contract volumes are therefore based on somewhat smaller price changes. The derivatives used by the Bayer Group to mitigate the risk of changes in exchange rates, interest rates and commodity prices are described in
Note [30.3] to the consolidated financial statements.
Assessment of the overall risk situation
Compared with the previous year, the overall risk situation did not change significantly in the reporting period. The overall risk assessment is based on a consolidated view of all significant individual risks. At present, no potential risks have been identified that either individually or in combination could endanger the continued existence of the Bayer Group.