Main risks
21
Risk Management (continued)
Regulatory changes
related to alcohol
Economic and
political environment
Report of the
Report of the
Financial
Sustainability
Other
Introduction
Executive Board
Supervisory Board
Statements
Review
Information
Heineken N.V. Annual Report 2017
The following risk overview highlights the
main risks that could hinderHEINEKEN
in achieving its financial and strategic
objectives or could represent athreat to the
business. This overview does not include all
risks and uncertainties that may ultimately
affect the Company: some risks currently
deemed immaterial, 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 31.
Strategic risks
What could happen
Alcohol remains under scrutiny in many
markets. This may prompt regulatorsto
take further measures limiting HEINEKEN's
freedom to operate, such as restrictions
or bans on advertising and marketing,
sponsorship, availability of products, and
increased taxes and duties leading to lower
revenues and profit.
Recent developments
Restrictive measures on alcohol consumption
and sale continue to betaken 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 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 underage drinking
or drinking and driving.
Strategic risks
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.
Recent developments
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 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
Explore Further:
- Advocating responsible consumption,
pages 135,142-143