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Risk Management
Integrated approach
Risk profile
Risk management as part of the HEINEKEN business framework
We are HEINEKEN
Heineken N.V.
Annual Report 2020
Introduction
Report of the
Executive Board
Report of the
Supervisory Board
Financial
Statements
Sustainability
Review
Other
Information
The COVID-19 outbreak and consequent measures
undertaken by local governments to contain the
spread of the virus have negatively impacted our
business in 2020. The extent of the pandemic
remains uncertain and it is expected to further
affect our way of doing business. To deal with this
and other uncertainties, HEINEKEN has a business
integrated approach to managing risks arising from
its strategy and daily operations.
At HEINEKEN, risk management is an integral
part of doing business, supported by clear
governance. Risks are an essential element when
opportunities are assessed and strategies set.
Management decisions are made in line with
HEINEKEN's risk appetite. Risks are identified,
mitigated and monitored on an ongoing basis, as
part of business routines.
HEINEKEN's risk management approach addresses
the risks the Company inevitably faces in achieving
its strategy. Managing risks in a conscious manner
increases the likelihood of achieving our strategy
and business objectives. A proactive approach
ensures risk management is part of our executive
conversations and is embedded in our processes.
This benefits our decision-making and is essential to
create and preserve long-term value.
The consequences of the COVID-19 crisis for
HEINEKEN's main risks are discussed in the
developments and risk mitigating actions for
the risks.
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
originating from emerging markets.
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.
HEINEKEN has undertaken business activities with
other market parties in the form of joint ventures
and strategic partnerships and with independent
distributors. 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 HEINEKEN business framework articulates the
key elements that the Company relies on to operate
effectively and deliver long-term value creation
while protecting its people, assets and reputation.
Our vision, purpose and values, 'We are
HEINEKEN', underpin the Company's strategic
objectives, enabled by our organisational structure
and Governance. The behaviours give clear
guidance to all employees on how to act and foster
a culture of achievement, collaboration and growth,
underpinned by a Behaviours framework that
reflects the expected attitudes in decision- making.
Continuous Risk Management supports the
achievement of business objectives, based on
our Risk Assessment Cycle, the HEINEKEN Code
of Business Conduct and the HEINEKEN Rules.
As part of the Risk Assessment Cycle, operating
companies and their Management Teams review
and update their risks on a continuous basis
throughout the year. The Code of Business Conduct
and its underlying policies set out HEINEKEN's
commitment to conduct business with integrity
and fairness, and respect for the law and our values.
The HEINEKEN Rules articulate how we work
and the standards to which we commit. They are
a key element for managing the risks faced by our
Company and translate our objectives into clear
instructions on how to conduct our daily business.
HEINEKEN's systems of risk management and
internal control, which are based on the COSO
Enterprise Risk Management and Internal Control
Reference model, form a fundamental part of the
HEINEKEN Business Framework.
Behaviours
Strategy
Governance
How we act
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Our global priorities
How we govern internally
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Code of Business
HEINEKEN Rules
Risk Management
Conduct
How we work
How we manage risks
How we behave
Laws and Regulations
Monitoring and Assurance
Policies
Standards and Procedures
Systems
Execution and change management
