21
Risk Management
To deliver its strategy, HEINEKEN manages in a systematic way the risks linked
to its daily operations as well as the main risks and opportunities arising from
its business environment.
Risk profile
Risk appetite
HEINEKEN Business Framework
HEINEKEN
Heineken NV.
Report of the
Report of the
Financial
Sustainability
Other
Annual Report 2016
Introduction
Executive Board
Supervisory Board
Statements
Review
Information
Effective management of risk forms an integral part of how HEINEKEN operates as a business and is embedded in day-to-day operations.
Responsibility for identifying potential strategic, operational, reporting and compliance risks, and for implementing fit-for-purpose responses,
lies primarily with line management. Group-wide risk management priorities are defined by regional and functional management and endorsed
by the Executive Board, who bears ultimate responsibility for managing the main risks faced by the Company and for reviewing the adequacy
of HEINEKEN's internal control system.
HEINEKEN is predominantly a single-product business, operating throughout the world in the alcohol industry. HEINEKEN is present in more than
70 countries, with a growing share of its revenues originated in emerging markets.
In recent years, there has been increased media, social and political criticism directed at the alcoholic beverage industry. An increasingly negative
perception in society towards alcohol could prompt legislators to implement further restrictive measures such as limitations on availability,
advertising, sponsorships, distribution and points of sale and increased tax. This may cause changes in consumption trends, which could lead to a
decrease in the brand equity and sales of HEINEKEN's products. In addition, it could adversely affect HEINEKEN's commercial freedom to operate
and restrict the availability of HEINEKEN's products.
HEINEKEN has undertaken business activities with other market parties in the form of joint ventures and strategic partnerships. Where HEINEKEN
does not have effective control, decisions taken by these entities may not be fully harmonised with HEINEKEN's strategic objectives. Moreover,
HEINEKEN may not be able to identify and manage risks to the same extent as in the rest of the Group.
The international spread of its business, a robust balance sheet and strong cash flow, as well as a commitment to prudent financial management,
form the context based on which HEINEKEN determines its appetite to risk. A structured risk management process allows HEINEKEN to take risks
in a managed and controlled manner. Key to determining the risk appetite is the nature of the risks:
- Strategic: Taking strategic risks is an inherent part of HEINEKEN's entrepreneurial heritage. In its pursuit of balanced growth, HEINEKEN is open
to certain risks linked to its presence in a wide array of developing countries.
- Operational: Depending on the type of the operational risk, HEINEKEN's risk appetite can be described as cautious to averse. In particular, ensuring
its employees' and contractors' safety, delivering the highest level of product quality and protecting its reputation have priority over any other
business objective.
- Reporting: HEINEKEN is averse to any risks that could jeopardise the integrity of its reporting.
- Compliance: HEINEKEN is averse to the risk of non-compliance with applicable laws or regulations, as well as with its own Code
of Business Conduct.
Strategy
Our global priorities
One HEINEKEN
How we govern internally
Behaviours
How we act
Monitoring and Assurance
Risk Management
How we manage risks
Laws and Regulations. Standards and Procedures
HEINEKEN Rules
How we work
Code of Business Conduct
How we behave
Policies
Vision, purpose and values
People Processes Systems Data
Execution and change management