Report of the Report of the
Contents Overview Executive Board Supervisory Board
Financial
statements
Other information
32. Financial risk management and financial instruments
Overview
HEIN EKEN has exposure to the following risks from its use of financial instruments, as they arise in the normal course of
HEINEKEN's business:
Credit risk
Liquidity risk
Market risk
This note presents information about HEINEKEN's exposure to each of the above risks, and it summarises HEINEKEN's policies and
processes that are in place for measuring and managing risk, including those related to capital management. Further quantitative
disclosures are included throughout these consolidated financial statements.
Risk management framework
The Executive Board, under the supervision of the Supervisory Board, has overall responsibility and sets rules for HEINEKEN's risk
management and control systems. They are reviewed regularly to reflect changes in market conditions and HEINEKEN's activities.
The Executive Board oversees the adequacy and functioning of the entire system of risk management and internal control, assisted
by Group departments.
The Global Treasury function focuses primarily on the management of financial risk and financial resources. Some of the risk management
strategies include the use of derivatives, primarily in the form of spot and forward exchange contracts and interest rate swaps, but
options can be used as well. It is HEIN EKEN policy that no speculative transactions are entered into.
Credit risk
Credit risk is the risk of financial loss to HEIN EKEN if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and it arises principally from HEINEKEN's receivables from customers and investment securities.
Following the economic crisis, HEINEKEN placed particular focus on strengthening credit management and a Global Credit Policy
was implemented. All local operations are required to comply with the principles contained within the Global Credit Policy and
develop local credit management procedures accordingly. We annually review compliance with these procedures and continuous
focus is placed on ensuring that adequate controls are in place to mitigate any identified risks in respect of both customer and
supplier risk.
As at the balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk is
represented by the carrying amount of each financial instrument, including derivative financial instruments, in the consolidated
statement of financial position.
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