Risks & Opportunities

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Risk and opportunity management

For us, comprehensive risk and opportunity management also means considering the opportunities and risks arising from ecological or social aspects, or from the management of our company (environment, social and governance – ESG img). We actively and systematically involve relevant stakeholders img in order to identify which current and potential ESG risks and opportunities are important for Deutsche Telekom. We also participate in a number of working groups and committees. We continuously track ESG issues and systematically ascertain our stakeholders’ positions on these matters.

Important tools we use for this purpose are:

  • Our risk management system, which systematically identifies, evaluates, and adresses relevant risks
  • Our (annual) evaluation of emerging risks, which provides an overview of new and long-term trends in external risks
  • Our extensive analysis of physical and transitory risks (risks resulting from sudden adjustments to economic sectors due to climate change), which we align with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD img)
  • Our involvement in working groups and committees, numerous national and international business associations, and social organizations (GeSI img, Federation of German Industries, Bitkom, econsense, and the German National Association of Senior Citizen's Organizations, for example)
  • Stakeholder dialog formats organized by us
  • Our various publications, such as the media review and newsletters
  • Our internal compliance evaluation, which also examines the most important sustainability risks
  • Our materiality process, which we are continually developing. In 2023, key factors influencing further development were recent revision the German Corporate Governance Code (GCGC) and preparations for the requirements from the CSRD img.

In our annual report, we also provide information about the following issues, which we have identified as key aspects of our risk-and-opportunity management process:

The risks determined by the annual risk assessment pursuant to the German LkSG and the annual LkSG report can be viewed here.


Global Reporting Initiative (GRI) 

  • GRI 2-23 (General Disclosures)

Emerging risks

Emerging risks img are difficult to predict, because their future development is extremely uncertain. They involve events that are beyond our influence and control, such as geopolitical tension, new technologies, or macroeconomic factors. These risks are either new or become significantly more significant for our company over time. Even if they already impact our business today, their impact can grow in the long term (three to five years) and potentially impede most of our activities to a much greater extent in the future.

We need to act early and effectively to identify and assess risks like this and protect our company and our customers from them. This could even require adjustment of our strategy and/or our business models to mitigate their impact. To enable us to respond to such risks comprehensively, our risk management system must systematically identify and assess these emerging risks, to derive mitigating measures.

We describe the emerging risks that are becoming increasingly important to us here.


Emerging risks with relevance for Deutsche Telekom

Technological risk: cyber attacks
Cyber attacks are increasing rapidly. The speed of digital transformation, machine learning, and computing capacity is growing exponentially. At the same time, the attacks are becoming increasingly specific and efficient. They are overtaking security fixes, with the result that the number of vulnerabilities that could be exploited by this kind of attack at our company is increasing.

The potential impacts of this risk include:

  • Failure to protect our infrastructure and our customer data against cyberattacks
  • A lack of knowledge among employees or excessively complex infrastructure can make it more difficult to prevent cyberattacks, such as those triggered by artificial intelligence
  • Compliance with increasingly strict legal requirements for data retention and data protection could affect our strategy or our business models
  • Financial losses can arise from the new extortion techniques that are increasingly being used in attacks and demanding payments in cryptocurrencies, for example
  • Loss of reputation, because customers could lose trust in the quality of our communications services

Our corrective measures include:

  • Switching to more robust IT control environments
  • Improving protection against widespread types of attacks
  • Deploying machine learning technology (artificial intelligence) to identify attacks
  • Improving reactivity when defending against identified attacks
  • Raising awareness of cyberattacks among our customers
  • Better recognition of malware and improvement of user authentication techniques

We explain further measures in the “Data protection & data security” chapter.

Environmental risk: weather extremes
Advancing climate change will increase the intensity and frequency of extreme weather events. The related physical effects include warming oceans, higher heat and humidity, increased average temperatures, heavy storms (wind, lightning, hail, tornadoes, and hurricanes), and heat waves – which in turn can result in natural disasters like flooding and drought.

The potential impacts of this risk include:

  • Flooding of river basins and coastal areas due to heavy rainfall, which can destroy or seriously damage our base stations, network nodes img, and other infrastructure
  • Tornadoes and hurricanes that can cause significant damage to data centers, cell towers, office buildings, and our retail outlets
  • Heavy storms can also damage or destroy cell towers, particularly at higher-elevation sites
  • Forest fires and heat waves can damage or destroy nearby cell towers or our equipment sites
  • Infrastructure that is not robust enough to withstand these tougher conditions in the long term
  • Reduction in the stability of our power supply

These impacts could result in longer and more frequent network outages, which in turn have the potential to lower our revenue, increase our churn rate, and damage our reputation. In addition, additional investments will be necessary to adapt our processes and make our infrastructure more robust. The costs of insurance cover for such events will likely increase steadily over time.

Our risk mitigation measures include:

  • Better methods for predicting when and where potential disasters might occur in future
  • Identifying weak points in our cell towers and other infrastructure
  • Eliminating identified weak points in our infrastructure to withstand higher wind speeds and temperatures; designing more robust network infrastructure in areas that are particularly susceptible to such disasters
  • Installing emergency power supplies for all critical network elements, to avoid network outages and reduce downtimes
  • Improving our plans for maintaining operations and for disaster recovery for scenarios in which such outages might occur

Business risk: infectious diseases/pandemics
Outbreaks of disease and pandemics cannot be predicted. Nonetheless, historical data shows that regional and global pandemics have become increasingly frequent over the past decades. A new sickness or virus can spread quickly, become a pandemic, and drastically impede global economic growth. This can affect multiple industry sectors and supply chains and have significant impacts on the way we live and work.

The potential impacts of this risk include:

  • Increasingly delayed deliveries and payments, as well as payment defaults among business customers and consumers could increase our bad debts
  • Restrictions in the public sphere could force our stores to close and affect sales and services for our customers
  • Travel restrictions could affect our roaming img traffic volumes and our revenue
  • Customer growth could be curbed, because it is difficult to acquire new customers
  • Companies may need to reduce their orders of IT services and devices
  • Restrictions to social contacts (distance learning and working from home) could overload our networks and reduce their efficiency
  • In the case of a severe pandemic, coupled with restrictions, our workforce could be reduced temporarily or permanently

Our corrective measures include:

  • Monitoring of relevant developments by our Group Situation Center
  • Organization of crisis management and task forces
  • Issuance of pandemic guidelines
  • Provision of suitable hygienic and personal protective equipment for sales outlets, offices, and network infrastructure sites
  • Ramping up and hardening our networks to handle additional peak loads in voice and data traffic
  • Protecting our customers and employees through mobile working, online sales, and online customer service

Geopolitical risk: geopolitical instability
Geopolitical tensions endanger stability with respect to the global economy and the financial markets. Economic, political, and/or technological rivalries between geopolitical powers could lead to further trading barriers and thus drive deglobalization even further.

The main potential impacts of this risk include:

  • Sanctions could lead to significant restrictions within our supply chain, potentially resulting in disruptions to business
  • Increased regulatory uncertainty could result in the alteration or removal of network infrastructure
  • Rising prices for the purchase of raw materials and supplies or even a scarcity of resources
  • Increased volatility on the financial markets could have a negative impact on the development of interest rates, exchange rates, and even our share price

Our risk mitigation measures include:

  • Diversification of our supply chain to cover numerous countries and various suppliers to reduce our dependence on individual countries
  • Increasing our supplies of critical components

Creating transparency regarding service relationships that could be critical across the entire value chain

  • Monitoring political developments to be able to take suitable action right away

Social risk: availability of talented job candidates
Our long-term success depends on our ability to acquire top talents, to hold on to them, and to develop them further. The worldwide skills shortage could get worse since young people are joining the workforce later on, older staff are leaving earlier, and there is a general increase in the need for experts in digitalization across all industries.

The main potential impacts of this risk include:

  • Reduced productivity could impact our innovativeness and threaten our competitive advantage
  • Trying to reach our most important business and financial targets with unfilled positions could lead to project delays and impact our efficiency
  • Increased pressure for existing staff could in turn lead to higher stress levels or greater dissatisfaction among employees and have a negative impact on our corporate culture
  • The loss of experienced employees could lead to knowledge gaps in key areas

Our risk mitigation measures include:

  • Succession planning, in which top talents are identified and developed to take on leadership positions
  • Employee development programs including reskilling and upskilling
  • New requirements such as health, diversity, and sustainability in order to gain new employees and retain those already at the company
  • Investments in automation, artificial intelligence, and other technologies to optimize our processes and lend extra support.
  • Setting up and strengthening our brand value as an attractive employer brand.
  • Developing long-term incentive and remuneration programs
  • An HR planning strategy which anticipates the skills needed in future and monitors potential staff turnover
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  • Tim Hoettges

    Foreword by Tim Höttges

    Finding solutions

    means finding the courage

    for open dialog, even beyond

    the boundaries of a company.

    Let’s all dare to be

    more transparent!

    Finding solutions means finding the courage for open dialog, even beyond the boundaries of a company. Let’s all dare to be more transparent!

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