Within the framework of their global activities and as a result of increasingly intense competition, Daimler’s divisions are exposed to a large number of risks, which are inextricably linked with their business activities. For the early detection, evaluation and consistent management of risks, the company uses effective management and control instruments that are combined into a uniform risk management system which meets the applicable legal requirements. The risk management system is an integral part of the overall planning, control and reporting process in all relevant legal entities and central functions, and aims to systematically identify risks and assess them with regard to their probability of occurrence and possible extent of damage. The responsible persons also have the task of developing, and initiating as required, measures to avoid, reduce and hedge risks and of monitoring them within the framework of a regular controlling process.

The risk management system enables the Board of Management to identify key risks at an early stage and to initiate suitable countermeasures. By carrying out targeted audits of all business units, the Corporate Audit department monitors compliance with the statutory framework and with the Group’s internal guidelines as defined in the Risk Management Manual, and, if required, initiates appropriate action. As part of a reorganization process, the Corporate Audit department centralized all auditing functions, which had previously been distributed among various locations, in 2006. This makes possible the standardization and uniform application of auditing processes across all business units and functions. The auditing process focuses on corporate audits (with regard to efficacy, efficiency and monitoring) along with financial and compliance audits (for details, see below). In addition to the Corporate Audit department, the external auditor reviews the risk early warning system that is an integral part of the risk management system. Key risk categories that are monitored individually and in terms of their combined effect include the following:

In order to live up to its economic responsibility and its responsibility for society and the environment, it is essential that the company define and monitor its subsequent activities. Daimler’s goal is compliance with the standards formulated for these areas – that is, ensuring that all of its business operations are in line with these standards. This is why Corporate Compliance, the Corporate Audit department and the Legal department are working jointly to ensure that all of the Group’s business operations conform with the external legal regulations as well as the internal ethical and legal regulations and guidelines.

Compliance is ultimately the responsibility of every employee at Daimler, with the Group providing support through a variety of tools and offerings. Employees who have questions concerning the application of the Group’s standards for business behavior can call the Corporate Compliance Desk, which processed approximately 4,000 inquiries in 2006. Confidential complaints by employees and by business partners (such as suppliers or customers) about suspected violations of the standards can also be addressed to the Business Practices Office (BPO).

Stuttgart, Germany Address:  Daimler AG Business Practices Office (BPO) HPC 96 / 0614 D – 70546 Stuttgart Phone:  +49 (0)711/17-9 65 28 or 0 800/2 89 46 43 Fax:  +49 (0)711/17-79 05 43 23 eMail: BPO.Germany@daimler.com

Farmington Hills, USA Address:  Daimler AG Business Practices Office (BPO) 36455 Corporate Drive Farmington Hills, Mi 48331 USA Phone:  +1 248 957 2630 or +1 866 493 5746 Fax:  +1 248 957 2631 or +1 866 493 5726 Awareness/Advice: +1 248 957 2632 eMail: BPO.Americas@daimler.com

A training program has been set up to familiarize employees with these issues. In 2006, for example, more than 5,600 employees participated in one-day training sessions at the corporate locations all over the world within the framework of this program. In small working groups, the company’s top management also received training on these issues and the related responsibility.

Daimler has made good progress with its efforts to reach its compliance targets. For one thing, an effective corporate compliance organization has been successfully set up with local compliance managers throughout the world. The first step involved introducing new anti-bribery guidelines and carrying out remediation measures in numerous national subsidiaries and business units. Appropriate controls are thus being used to systematically establish preventive mechanisms that will guarantee compliance with existing laws and internal guidelines. More details on risk management/compliance at Daimler are available in the Annual Report 2006 p.67ff., p.118ff.