Risk Management continued
Report of the
Report of the
Financial
Other
Contents
Overview
Executive Board
Supervisory Board
statements
information
Financial reporting
The risk management and control system for financial reporting includes clear accounting policies, a standard chart of accounts and annual
Letters of Representation signed by regional, functional and local management. The HEINEKEN common systems and embedded control
frameworks are implemented in a large number of the operating companies, and support common accounting and regular financial reporting
in standard forms. Testing of key controls relevant for financial reporting is part of the Financial Reporting and Compliance Audits in operating
companies on common systems. The external audit activities provide additional assurance on the financial reporting. The external auditors
also report on internal control issues through their management letters, and attend the regional and certain local assurance meetings.
Main risks
The risk overview highlights the main risks which could hinder HEINEKEN in achieving its financial and strategic objectives or could represent
a threat to the business. This overview does not include all risks and uncertainties that may ultimately affect the Company: some risks currently
deemed immaterial or unknown to it, could ultimately have an adverse impact on ElEINEKEN's financial performance, reputation, business
objectives, employees or assets. Timely discovery and accurate evaluation of such risks is at the core of El EINEKEN's risk management processes.
The financial risks are dealt with separately in note 32 to the Financial Statements.
Risk description
Regulatory Changes related to Alcohol
Alcohol remains under scrutiny in many markets and prompts
regulators to take further restrictive measures including restrictions
and/or bans on advertising and marketing, sponsorship, points
of sale, and increased taxes leading to lower revenues and profit.
Specific risks include:
Increased restrictions on commercial freedoms
Increased taxes and duties
Increased restrictions in availability
Customer relationships
Maintaining strong relationships with our customers is key for
brand positioning and availability to consumers. Consolidation
among our customers may affect our ability to obtain pricing
and favourable trade terms.
Specific risks include:
Inability to secure appropriate shelf space
Limited ability to raise prices
Increased cost of promotional activities
Changing consumer preferences
Consumers' preferences and behaviours are evolving, shaping an
increasingly complex and fragmented beer category. This requires
EIEINEKEN to constantly adapt its product offering, innovate and
invest to maintain the relevance and strength of its brands.
Specific risks include:
Inability to further build our brands due to lack of
consumer insight
Loss of brand equity and market share of EIEINEKEN brands
What we are doing to manage the risk
Placing of responsible consumption labels on ElEINEKEN's products
Continuous advocacy of responsible consumption of
HEINEKEN products
Co-operation with governments, NGOs and businesses to prevent
abusive consumption
Global commitments by alcohol producers to support reduction
in abusive consumption
Management of customer relationships at central level
(multinational customers) as well as local level
Development of joint business plans with distributors
and key retailers
Central commercial capabilities programme to enhance
sales performance (Excellent Outlet Execution)
Strengthened commercial organisation
Central marketing academy
Investments in consumer and market intelligence
Strengthened innovation organisation to respond
to industry changes
Effective use of social media and consumer and
marketing intelligence
Investments in protecting brands, including the
registration of trademarks, anti-counterfeit measures
and domain names
Eleineken N.V. Annual Report 201A