Risk management
Managing risks is explicitly on the agenda of the management
in order to protect the business from the effects of disasters,
failures and reputational damage. Continuity and sustainability
of the business is as important to stakeholders as growing
and operating it.
Report of the Executive Board continued
Risk management and control system
The Heineken risk management and control
systems are aimed at a reasonable level of
assurance, that the risks of the Company are
identified and managed and that the operational
and financial objectives are met, in compliance
with applicable laws and regulations. A system of
controls to ensure adequate financial reporting is
included. Heineken's internal control system is
based on the COSO Internal Control Framework.
Risk profile
Heineken is a single-product company, with
a high level of commonality in its worldwide
business operations spread over many mature
and emerging markets. The worldwide activities
are exposed to varying degrees of risk and
uncertainty, some of which, if not identified
and managed, may result in a material impact
on a particular operating company, but may
not materially affect the group as a whole.
Risk management
Doing business inherently involves taking risks,
and by managing these risks Heineken strives
to be a sustainable and performance driven
company. Business risk assessments are part of
Heineken's business planning and performance
monitoring process, which was further structured
in 2006. Operational risks are mainly managed
through the progressing embedding of Key
Controls based on Heineken common processes
and systems. The risk management and control
systems are considered to be in balance with
Heineken's risk profile, although such systems
can never provide absolute assurance. Following
Heineken's continuing growth and changing risk
profile, the Company's risk management and
control systems are subject to continuous review
and adaptations.
Responsibilities
The Executive Board, under the supervision of the
Supervisory Board, has overall responsibility for
Heineken's risk management and control systems.
Regional and operating company management
are responsible for managing performance,
underlying risks and effectiveness of operations,
within the Rules set by the Executive Board,
supported and supervised by group departments.
Heineken Company Rules
In 2006, the Heineken Company Rules on the
various functional areas were reviewed and
updated. Group departments further
strengthened their monitoring activities.
Business planning and performance monitoring
The main pillar of Heineken's internal governance
activities is the business planning and
performance monitoring process. Operating
companies strategy, business plan and quarterly
performance are discussed with Regional
Management. Regional performance is discussed
with the Executive Board. The approved business
plans include clear objectives, performance
indicators and target setting, which provide the
basis for monitoring performance compared
to plan. In 2006, the process of planning and
reporting were further streamlined and aligned
to the regional management structure introduced
in 2005.
A C Heineken N.V.
tU Annual Report 2006