Management Report

Opportunities and Risks

As a global enterprise with a diverse business portfolio, the Bayer Group enjoys a variety of opportunities and is also exposed to numerous risks. The anticipated development opportunities are materially unchanged from those outlined in the Bayer Annual Report 2007.

A risk management system is in place. Apart from financial risks there are also business-specific selling market, procurement market, product development, patent, production, environmental and regulatory risks. Legal risks exist particularly in the areas of product liability, competition and antitrust law, patent disputes, tax assessments and environmental matters. Information on the Bayer Group’s risk situation is provided in the Bayer Annual Report 2007. Significant changes that have occurred in respect of the legal risks compared to their presentation in the Bayer Annual Report 2007 are described in the Notes to the Condensed Consolidated Interim Financial Statements under “Legal Risks.” The default risk for loans has generally increased across all sectors as a result of the current situation on the financial markets. However, the Bayer Group so far has not experienced any notable defaults. The Bayer Annual Report 2007 can be downloaded free of charge at http://www.annualreport2007.bayer.com/.

At present, no potential risks have been identified that either individually or in combination could endanger the continued existence of the Bayer Group.