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Risk Management System

Please refer to the 2014 combined management report for a description of Bertelsmann’s risk management system (RMS) and the accounting-related RMS and internal control system (ICS).

Significant Changes in Risks since the 2014 Combined Management Report

Please refer to the 2014 combined management report for a presentation of the key risks to the Bertelsmann Group. The following significant changes have been identified as part of the risk report of June 30, 2015. Overall, after the first half-year, the same Group risks are considered material as those existing as of December 31, 2014. However, the significance of individual types of risk in terms of Bertelsmann’s future business development has changed. Whereas the financial market risks that were classified as low as of December 31, 2014, are now assessed as moderate, the remaining risks from the Penguin Random House merger can be classified as low due to the successful ongoing integration. In the previous year, these risks were classified as moderate. The most significant risk in the Group remains the pricing and discounting risk.

Strategic and Operational Risks

A continuation of the economic recovery is expected in the euro zone. However, certain risks remain for the global recovery. For Bertelsmann, this primarily results in risks to businesses that depend on the advertising market.

The strategic and operational risk position for the Group remains essentially unchanged from that depicted in the 2014 combined management report.

Legal and Regulatory Risks

Please refer to the 2014 combined management report for details of the legal and regulatory risks. No significant changes have been identified.

Financial Market Risks

Compared to the situation in the 2014 combined management report, the financial market risks have grown to a moderate level due to increased market volatility.

Overall Risk

The overall risk position has increased slightly compared with the previous year. No risks endangering Bertelsmann’s continued existence were identified as of June 30, 2015. Neither are there any substantial risks discernible from the current perspective that could threaten the continued existence of the Group.

Opportunities

The assessment of opportunities has not changed substantially compared to the information presented in the 2014 combined management report.