Risk Management

RISKS RELATED TO OUR HOLDINGS

Our risk management setup allows us to safeguard the long-term viability of our portfolio companies by understanding the inherent risks associated with each investment and to support the companies in managing these risks in a changing environment

A.P. Møller Holding A/S’s investments consist of Our Large Investments, Our incubations and Our Financial Investments.

The ambition of A.P. Moller Holding is to hold a diversified and financially robust portfolio to sustain unexpected credit events as well as safeguarding the A.P. Moller Foundation. Hence, risks are consolidated and monitored centrally in A.P. Moller Holding.

Given our large holdings in A.P. Moller – Maersk and Danske Bank, it is evident that the business risks for A.P. Moller Holding related to these two holdings are material however deviating as a consequence of their different activities. With Constant Care embedded in our corporate DNA we continuously monitor and evaluate risks, small and large, in our businesses throughout the year.

Risk reporting is an integrated part of our business processes allowing A.P. Moller Holding to respond appropriately to changing environments. Portfolio performance reports are prepared for the Board of Directors.

In 2018, we have expanded the organisation significantly and have built operational capabilities within the organisation. We are continuously developing our framework and have embedded controls and operational risk mitigation processes in our critical daily operations. We have a constant focus on IT- security and have implemented procedures to continuously assess and ensure that we follow market standards and developments.

In the overall mitigation of risks, the company is insured against relevant material risks that may inflict losses to the company.

OUR LARGE INVESTMENTS & OUR INCUBATIONS Risks regarding Our Large Investments and Our incubations include business and financial risks associated with the operation and performance of our holdings. Such risks are effectively defined and managed decentrally in each of the individual affiliates which have implemented their own risk management policies and procedures.

As owner and a member of the Board of Directors of each affiliate, we monitor business performance in the affiliates closely, and reports on business and risk-related issues are appropriately provided to our Board of Directors.

We have further expanded our investment team during 2018. The team will be focusing on large and long-term investments and brings valuable investment expertise. As we evaluate investment opportunities, the investments will undergo committees and investment gates, where thorough risk analysis and mitigation will form part of the evaluation.

As the large investments are expected to have a long-term ownership horizon, there are inherent increased risks related to such investments. At all times it is part of our inherent strategic beliefs to invest in and build businesses that have a positive impact on society. Hence, we strive to ensure that all our partners acknowledge our values and share our commitment to conduct business in an ethical, legal and socially responsible manner.

FINANCIAL INVESTMENTS A.P. Moller Holding also has a portfolio of fixed income and equities, managed by its own investment team. The overall objective of the portfolio is to create economic value in line with our values and ensures a part of our portfolio remains ultra-liquid.

The Board of Directors defines the investment policy. We manage the market, credit and currency risks related to our portfolio investments by limiting maximum exposure to individual asset classes and underlying assets. The guidelines are reviewed regularly to ensure they reflect the market situation, and our financial situation at any given time.

Although having a long-term portfolio investment perspective, the financial investments are to a large extent invested in highly liquid assets, acting as a buffer in order for the company to be flexible and able to react as needed in relation to our large investments or significant changes in our cash flows. ASSET DISTRIBUTION 2018

15%

2% 3%

24% 55% Transport & Logistics Transport & Logistics Banking Banking Offshore Drilling Offshore Drilling Product Tankers Product Tankers Financial portfolio Financial portfolio