aerational risks
47
Stability of Africa and the Middle East Region
In the Africa and Middle East region, current volume growth
is driven by economic growth in Nigeria, the Middle East and
in Central Africa. The region remains stable and is at peace in
most areas. In Nigeria, the unrest in the Niger Delta is largely
resolved and that region has now returned to relative calm.
Economic downturn
The economic crisis has impacted our regular business
activities and performance, in particular in consumer
spending and solvency. However, the business impact
differed across our regions and operations. Local management
has assessed the risk exposure following Group instructions
and is taking action to mitigate any higher than usual risks.
Intensified and continuous focus is being given in the areas
of customers (managing trade receivables and loans) and
suppliers (financial position of critical suppliers). Also,
management attention is given to our relationships with
banks (see capital availability risk) and insurance companies
redit worthiness (re)insurance companies). Regional
Management and involved Group functions oversee the
Tectiveness of management analysis and action, supported
input from Internal Auditors.
^organisations and change programmes
any reorganisation projects (amongst others, centralisation
back office activities, closure of breweries and other
ghtsizing and downsizing activities) have been realised,
e under way or are in preparation. Highest impact is in
te supply chain, wholesale business and support functions
Europe and Americas. Due to social unrest or temporarily
duced operational effectiveness, there is a risk that
oduction quality and supply continuity could be affected
ad might negatively impact financial performance and
ompany reputation.
ompany-wide strategic programmes are overseen by the
xecutive Board, whilst change projects at regional and local
vel are directly managed by appropriate management
ams including capacity allocation and priority setting. The
aerating Companies concerned manage reorganisation
ojects with care, the right speed, alignment with
levant industrial and external relations and consistent
mmunication to employees. Contingency plans have been
ut in place and clear targets are set on achieving the main
aange objectives. Risk Management is an integral part of
inning change projects.
Business integration
In the pursuit of further expansion, Heineken seeks to strike
a balance between organic and acquired growth. Recently,
Heineken has been very acquisitive with transactions in
emerging markets, the Scottish Newcastle acquisition in
2008 and the expected completion of the acquisition of
FEMSA during 2010. In most acquisitions, Heineken is faced
with different cultures, business principles and political,
economic and social environments. This may affect corporate
values, image and quality standards. It may also impact the
realisation of long-term business plans, including synergy
objectives, underlying the value of newly acquired companies.
In order to mitigate these risks, Heineken continuously
improves its business development and integration activities.
This includes significant involvement of relevant Group
processes, planning and departments, Operating Companies
and Regional Management in carrying out effective due
diligence processes and preparing 'take charge' and
integration plans. Heineken has best practice programmes
in place for acquisition and integration processes, which
include standardised acquisition and due diligence processes.
Supply continuity
Discontinuity of supply of our products could affect revenue
and market shares. This is not considered a major risk due
to the relative size and geographical spread of operations.
However, specific attention is given to the supply of beer
from the Netherlands to profitable export markets. Heineken
Netherlands Supply is finalising the implementation of a
Business Continuity Management process related to the
supply from the Netherlands, which is integrated with the
planning and reporting cycle. It is secured through integration
with ISO certified quality management assurance systems.
Information security
Heineken's worldwide operations are increasingly reliant
on information systems. The increased centralisation of IT
systems allows central enforcement of security measures
across Operating Companies. However, it also means that
the impact of any information security incident will be much
larger and therefore requires strict monitoring. Heineken's
Operating Companies and the central IT services must
comply with a strict information security policy to ensure the
confidentiality and integrity of information and the availability
of information systems. An IT risk management system
is in place for all sites including IT risk identification and
monitoring, biannual policy compliance assessments,
progress of improvement monitoring and independent audits.
Annual Report 2009 -
Heineken N.V.
