Long-term Growth

Challenges, Opportunities and Risks

Although the German economy reported growth for the tenth year running in 2019, economic momentum slowed considerably. According to experts, there is still no sign of a turnaround in the residential property market. Property prices also continued to rise in the year under review. While the demand for housing in metropolitan areas remains on the rise, the population in rural areas is dwindling. Nevertheless, demand for homes will continue to outstrip supply in the future overall, which will at the very least keep rents at a high level. These economic and social developments have a decisive impact on our success – and bring about both risks and opportunities for Vonovia. The extent to which the coronavirus pandemic will have a long-term impact on our business was impossible to predict at the time this report was published.

Risk Management 102-15

Vonovia has a comprehensive risk management system in place that enables it to identify, assign weightings to, and manage opportunities and risks relevant to the company. This:

• Reduces potential threats
• Secures the future viability of the company
• Promotes strategic development
• Supports sustainable conduct

For transparency purposes, we explain Vonovia’s risk situation in detail in our annual reporting and publish a qualified list of the “Top 10 Risks” on behalf of the Management Board (see chapter Opportunities and Risks, AR 2019).

The Management Board bears full responsibility for risk management. The Head of Controlling, who is part of the organization led by the Chief Financial Officer (CFO), is responsible for the operational management of the risk management system. Risk Controlling initiates the periodic risk management process and consolidates and validates the risks reported. The Head of Controlling is supported by risk owners – managers at the level directly below the Management Board.

Management is based on an integrated, five-pillar management approach:

Five Pillars of Risk Management at Vonovia

Vonovia updated its existing risk management system in the second half of 2019.

We monitor and evaluate any risks that could result from climate change. Our properties are not located in areas that are exposed to particular risks arising from the potential impact of climate change. We therefore believe there are currently no direct risks worth mentioning that could result from extreme weather conditions due to climate change such as strong rains and flooding. 201-2

You can find detailed information in our 2019 Annual Report (see chapter Opportunities and Risks, AR 2019).