Notes to the Consolidated Financial Statements (continued)
29. Trade and other payables
30. Financial risk management and financial instruments
Risk management framework
Report of the
Report of the
Annual Report 2016
In millions of EUR
Accruals and deferred income
Taxation and social security contributions
Returnable packaging deposits
HEINEKEN 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.
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 HEINEKEN 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 HEINEKEN's policy that no speculative transactions are entered into.
Credit risk is the risk of financial loss to HEINEKEN 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 of 2008, 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. HEINEKEN annually reviews 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.