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Last Update: 03/12/2009
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Part of the audited Consolidated Financial Statements and Management´s Analysis

Other significant risks

Prospective candidates for specialist and management positions: It is our goal to form the best team in industry. At the same time, we are aware of the challenges brought through demographic change and international competition for highly qualified specialist and management candidates. BASF is prepared for this global competition through attractive compensation and benefit packages. We have initiated regional projects for the analysis of local labor markets and for mid to long-term recruitment planning. One of these central programs is “Generations@Work.” An important element is a sustainable personnel policy which focuses on the recruitment of qualified new talents and their continuous training and development. Programs to help our employees balance career and family life also make a significant contribution.
More information on “Generations@Work” can be found in the chapter “Employees”

Research and Development; Exploration: Due to the high degree of complexity and uncertainty involved in chemical and biological research, there is a risk that projects might be discontinued or that developed products will not receive approval for sale. We lessen this risk through our global Know-how Verbund, our collaboration with our partners and customers as well as our innovation process whereby efficiency, chances of success, and general conditions of research projects are continuously reviewed. A significant contribution to long-term strategic risk management is made by the alignment of strategic goals and the research portfolio as part of both strategic planning and strategic controlling. There are also opportunities and risk in oil and gas exploration. The search for new oil and gas reserves is dependent on geological conditions. We lessen such risks by means of a balanced exploration portfolio.

Sustainability: BASF is committed to combining economic success and the protection of the environment with socially responsible business. Contraventions to our voluntary commitment to sustainability or to laws represent a reputational risk and could lead to operational or strategic risks. To promptly recognize risks and opportunities related to sustainability, we have set up a dedicated management system. The results are then used to initiate change processes in the company, in order to be prepared for any risks and to exploit opportunities accordingly. We have established global monitoring systems to ensure the adherence to laws and our voluntary commitments in the areas of environment, health and safety as well as to labor and social standards. These include the supply chain on a company-wide basis. In order to assure society’s acceptance of our business activities, we remain in constant exchange with relevant stakeholders.
More information on monitoring tools can be found in the chapter “Sustainability management”

Acquisition and investment decisions: Implementing acquisition and investment decisions involves complex risks. The evaluation of risks and opportunities already plays a significant role during the assessment of potential acquisition targets. Opportunities and risks are analyzed and quantified in detail during due diligence. Risks and opportunities are directly connected to acquisitions and their integration, such as increased staff turnover, a better or worse realization of synergies, or the assumption of obligations that were difficult to quantify in advance. Therefore implementation and follow-up take place along defined processes. By nature, the acquired businesses are subject to general market risks and business-specific risks. Therefore, acquired businesses are promptly integrated into the BASF risk management process, while taking business-specific areas of risk into account.

Information technology: To reduce possible risks, BASF has an integrated, Group-wide-standardized IT infrastructure and applications, back-up systems, replicated databases, viruses and access protection, and encoding systems. Risk management is conducted through Group-wide regulations for organization and application as well as an internal control system based on this.

Patent and intellectual property rights: The Global Intellectual Property department of BASF SE, together with the appropriate units of the U.S.-based BASF Corporation and BASF Coatings, Münster, Germany, monitors all the intellectual property rights of BASF. At the same time, we aim to avoid patent and licensing disputes as far as possible through our extensive clearance research.

Security: BASF’s Corporate Security department, through its Group-wide network, works in close cooperation with local security authorities to develop measures to protect BASF from worldwide security risks.

Legal risks: We limit risks from potential wrongdoing or legal infringements by using compliance programs and centralized contract management.

OTHER SIGNIFICANT RISKS


  • Prospective candidates for specialist and management positions
  • Research and Development; Exploration
  • Sustainability
  • Acquisition and investment decisions
  • Information technology
  • Patents and intellectual property rights
  • Security
  • Legal risks

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