Risk Management continued
Report of the
Report of the
Financial
Other
Contents
Overview
Executive Board
Supervisory Board
statements
information
Risk description
Economic and political environment
The current economic and political uncertainties could impact
our business and that of our customers. This may lead to lower
volumes, pressure on selling prices and increased credit risk and
suppliers' insolvency.
Specific risks include:
Down trading
Increased credit risk
Increased taxes
Insolvency of critical suppliers
Impairment of goodwill related to acquisitions
Adverse exchange rate fluctuations
Pension plan shortfalls due to the development of the
financial markets
What we are doing to manage the risk
Additional monitoring and mitigating actions related
to customers' solvency
Implementation of a Global Credit Policy
Supplier selection process
Developing contingency plans
Taking prudent balance sheet measures
Strengthening of short-term liquidity positions
Training country general managers in Public Affairs
Execution and change management
In the last years, HEINEKEN has engaged in several significant
business improvement projects. These strategic transformation
programmes may not deliver the expected benefits or may incur
significant cost or time overruns.
Specific risks include:
Lower than expected benefits
Ineffective or inefficient programme execution affecting
supply chain, wholesale business, support functions,
quality standards, business plans and synergies
Selection and prioritisation of business improvement projects
Involvement of top management in all major projects
Planning of projects and monitoring of third party providers,
project costs and benefits
Improved project governance organisation including project
management and progress reporting
Supply chain
Disruptions in the supply chain could lead to HEINEKEN's inability
to deliver key products to key customers, revenue loss and brand
damage. Changes in the availability or price of raw materials,
commodities, energy and water may result in a shortage of
those resources or increased costs.
Specific risks include:
Failure of IT systems
Factors beyond our control such as natural disasters, political
instability, military conflicts
Epidemic disease
Limited availability of production materials or resources
Failure to pass on cost increases
Business disruption
Business continuity plans
Implementation of back-up scenarios
Monitoring of the solvency of customers and suppliers
Supplier performance measurement system to monitor high
risk supply areas and, where necessary, the ability to intervene
Global insurance policies
Leveraging scale by making use of flexibility in contracts
Long-term contracts and active hedging policy
Ownership of several strategic malteries and packaging facilities
Implementation of a Global Purchasing organisation
Policy to ensure at least dual suppliers for all primary
production materials
Increased focus on sustainable water sourcing
and water protection
26
Heineken N.V. Annual Report 2014
