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

Jaarverslagen en Personeelsbladen Heineken

Jaarverslagen | 2014 | | pagina 26