RISK MANAGEMENT Managing risks is explicitly on the agenda of 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 the stakeholders as growing and operating it. 44 REPORT OF THE EXECUTIVE BOARD HEINEKEN N.V. ANNUAL REPORT 200L Risk management and control system The Heineken risk management and control systems aim to ensure 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 appetite The Company is recognised by its drive for quality, consistency and financial discipline. Entrepreneurial spirit is encouraged across the Group to seek opportunities supporting continuous growth (like business development and innovation), whilst taking controlled risks. 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. Compared to other leading beer companies, Heineken has a much wider spread of its businesses and risks across the globe. Risk management Doing business inherently involves taking risks, and by managing these risks Heineken strives to be a sustainable and performance-driven company. Structured risk assessments are part of, amongst others, change projects, business planning and performance monitoring process, common process and system implementations, acquisitions and business integration activities. 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 The Heineken Company Rules are a key element of the risk management system and are in place to set the boundaries within which operating companies should conduct their business. A governance procedure, and activities on continuous awareness and compliance are in place, managed by the Heineken Company Rules Network, which meets on a semi-annual basis. The Assurance Letter, signed annually by all Regional Presidents, General and Finance Managers worldwide, provides additional comfort on financial reporting and selected rules. Business planning and performance monitoring The main pillars of Heineken's internal governance activities are the annual business planning and performance monitoring. Operating companies' strategies, business plans, key risks 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 business plan. These plans also contain an annual assessment of the main risks (including mitigation plans) and financial sensitivities, although these assessments require further improvement. Heineken made good progres: on its Company-wide programme to create a more integrated management information environment for reporting to Regions and Group. Internal control in operating companies Heineken is progressing the Group-wide development and implementation of best practice processes supported by common IT systems. At the end of 2008, 69 per cent of Heineken's operations (based on revenue) worked in accordance with the evolving Heineken Common System. Next to the Supply Chain area, also other functions work on improving documentation, measurement and performance of processes under the Business Process Management Initiative. Best practice key control frameworks, to ensure the integrity of the information processing in supporting the day-to-day transactions and financial and management reporting, are embedded in developed common processes/systems. Internal Audit is strongly involved in monitoring controls based on a common audit approach, whilst plans are in preparation to strengthen controls monitoring by management

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Jaarverslagen | 2008 | | pagina 46