Investor Presentaiton

32 A.P. Moller-Maersk Annual Report 2020 Directors' Report Our business Risk management =1 Risk management Risk management at A.P. Moller - Maersk is strategically focused and designed to contribute to the achievement of the company's business objectives in the medium-term and to ensure the longevity of the company in the long-term. A.P. Moller-Maersk is accelerating its transforma- tion to become the global integrator of container logistics. The transformation success hinges on the ability to perform and transform at the same time through deployment of critical change levers such as technology, processes and people. It is essential that risks inherent to the business activities and risks associated with the transformation are man- aged well to keep the potential financial and reputa- tional impact of such risks within acceptable levels. With a defined roadmap in place for the trans- formation, the risks associated with the transformation at its current stage are largely execution risks relating to, e.g., customer service levels, technology roadmap, market risks for the Ocean segment, growth capabilities for the Logistics & Services segment, and people capa- bilities. These risks require active management and monitoring as described in the 2021 Key risk analysis described below. A.P. Moller-Maersk is exposed to a variety of risks in the conduct of its business and execution of its strategy. A.P. Moller - Maersk has a well-established Enterprise Risk Management (ERM) process to Risk monitoring Development of key risks and mitigation actions are monitored by risk deep- dives and reporting Risk identification Risks are continuously identified and reported using uniform templates and tools A.P. Moller-Maersk risk management process Risk mitigation Risk mitigation action plans are prepared and implemented across the affected businesses Risk assessment Identified risks are analysed and assessed to determine triggers, impact and likelihood Risk recording Key risks are established, prioritised and documented, and risk owners are appointed The Coronavirus (COVID-19) The COVID-19 pandemic continues to impact the global economy and the world's supply chains. The global demand growth for containers contracted by around 2% in 2020, albeit with large fluctuations in demand during the year. Overall, A.P. Moller-Maersk was able to manage the impact on demand through tight cost and agile capacity deployment. After the initial steep disruption of demand in the first quarter, a strong and unexpected recovery in the demand for containerised goods during a period where services remained curtailed, implied an extreme challenge to cope with in terms of cost and capacity management. As A.P. Moller-Maersk manages its way through the pandemic, three objectives continue to guide its decisions: protecting its employees, serving its customers by keeping its global network and ports operating, and helping societies fight the virus. Proactive risk management, deployment of effective crisis and business continuity management, and a strong resolve from employees ensure that so far, the operational impact of COVID-19 has been minimised. One of the biggest COVID-19 challenges for A.P. Moller Maersk has been performance of crew changes for the vessels, mainly due to prevailing restric- tions. A.P. Moller - Maersk proactively addressed this serious issue through collaboration with governments, airlines, airport operators, hotels, and port authorities, and use of special A.P. Moller - Maersk charter flights. The pandemic continues to impact the transportation and logistics industry operationally and financially. It is difficult to predict the business impact in 2021, which will depend wholly on the duration of the pan- demic and the resulting lockdowns of countries and economies globally, as well as on the associated changes in demand patterns.

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