23 Risk Management (continued) Main risks Strategic risks Regulatory changes related to alcohol Recent developments Economic and political environment Recent developments Customer relationships Recent developments Heineken NV. Report of the Report of the Financial Sustainability Other Annual Report 2016 Introduction Executive Board Supervisory Board Statements Review Information The following risk overview highlights the main risks that 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, known to the Company, could ultimately have an adverse impact on HEINEKEN's financial performance, reputation, business objectives, employees or assets. Timely discovery and accurate evaluation of such risks is at the core of HEINEKEN's risk management processes. The financial risks are dealt with separately in note 30 to the Financial Statements. The Statement of the Executive Board is included in the Corporate Governance Statement on page 33. What could happen Alcohol remains under scrutiny in many markets and prompts regulators to take further restrictive measures including restrictions or bans on advertising and marketing, sponsorship, availability, and increased taxes and duties leading to lower revenues and profit. What we are doing to manage this risk Responsible consumption is one of the priorities of HEINEKEN's Brewing a Better World sustainability programme. Using the power and reach of its brands, HEINEKEN strives to make responsible consumption aspirational and works closely with local governments, NGOs and specialists to prevent and reduce harm caused by abuses such as under-age drinking or drinking and driving. Restrictive measures on alcohol consumption and sale continue to be taken across geographies, especially through excise duties increases as in Vietnam, Greece, Egypt and Russia. Continued focus by WHO, OECD, UN and EU on alcohol as part of the Non-Communicable Disease agenda could lead to additional restrictions which would impact HEINEKEN's business across multiple geographies. What could happen Throughout the world, local or regional economic and political uncertainties could impact our business and that of our customers. In particular, the risk of an economic recession, change of laws, trade restrictions, inflation, fluctuations in exchange rates, devaluation, nationalisation, financial crisis, or social unrest could adversely affect our revenues and profits. What we are doing to manage this risk HEINEKEN has set up various tools to limit the impact of such events on its business such as supplier management, short-term liquidity management, tight foreign exchange monitoring, prudent balance sheet measures, and scenario planning. For events which could threaten the continuity of the business, contingency plans are in place. Political risk has expanded beyond emerging markets and has become a permanent element of the economic landscape. Brexit and the change of administration in the US have created significant additional uncertainties. Agility has become a priority to enable businesses to navigate subsequent changes in laws, currency movements, import restrictions, scarcity of hard currencies, and their impact on the Company's profit. What could happen 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 and negatively impact our operating margin. What we are doing to manage this risk HEINEKEN constantly invests in its business relationships and has developed joint business plans with distributors and key retailers, while enhancing sales performance through commercial capabilities programmes and customer relationship management at central and local level. The retail consolidation wave seen in the past five years in most developed markets has not yet passed. This has led HEINEKEN to tap into new distribution channels, such as online retail, and to develop a unique and innovative sales approach to boost its on-trade business which is currently being rolled out across all four regions.

Jaarverslagen en Personeelsbladen Heineken

Jaarverslagen | 2016 | | pagina 24