Why should you further reduce your speed here?

You selected both correct answers: reducing speed because the red car could cross into your lane, and because people might step onto the road. These reflect important principles of defensive driving in Germany. You should always reduce your speed further when there are potential hazards, such as vehicles that might unexpectedly change lanes or pedestrians who could enter the roadway. Slower speeds give you more time to react safely. Being prepared for unpredictable behavior from others helps prevent accidents, especially in situations where your visibility or reaction time might be limited. Keep applying this approach whenever you see risks ahead.