Risk Management System

Please refer to the 2015 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 2015 Combined Management Report

Please refer to the 2015 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 as of June 30, 2016. Overall, after the first halfyear 2016, the same Group risks are considered material as those existing as of December 31, 2015. However, the significance of individual types of risk in terms of Bertelsmann’s future business development has changed. The customer risks that were classified as moderate as of December 31, 2015, have increased in significance. This is primarily attributable to the increase in individual risk positions at Arvato and Penguin Random House. The most significant risk in the Group remains the pricing and discounting risk.

Strategic and Operational Risks

The strategic and operational risk position for the Group remains essentially unchanged from that depicted in the 2015 Combined Management Report.

Expectations of a moderate economic recovery in the eurozone remain unchanged. However, the risks for the world economy are now greater, especially following the Brexit referendum. The long-term effects on economic development, in particular in the UK and in the eurozone, will depend greatly on the framework conditions for the UK’s exit from the EU. For Bertelsmann, this could result primarily in risks to businesses that depend on the advertising markets.

Legal and Regulatory Risks

Please refer to the 2015 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 2015 Combined Management Report, the financial market risks remain at a moderate level.

Overall Risk

The overall risk position has increased slightly compared with the previous year. No going concern risks were identified for Bertelsmann as of June 30, 2016. There are also no substantial going concern 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 2015 Combined Management Report.