o www.ahold.com/reports2009
How we manage risk - continued
Risk factors
Strategic risks
Governance
The principal risk factors that may impede the achievement of Ahold's objectives with
respect to strategy, operations and compliance are described hereafter in the Annual
Report. The enterprise risk management system, the governance and control standards
incorporated into Ahold's ABC Framework and the monitoring systems described above
are the principal means used by Ahold to manage these risks. Management is not aware
of any important failings in these systems per year-end 2009.
The following discussion of risks relating to Ahold should be read carefully when
evaluating its business, its prospects and the forward-looking statements contained
in this Annual Report. Any of the following risks could have a material adverse effect
on Ahold's financial position, results of operations and liquidity or could cause actual
results to differ materially from the results contemplated in the forward-looking statements
contained in this Annual Report.
Ahold recognizes different strategic, operational, financial and legal compliance risk
categories. The risks described below are not the only risks Ahold faces. There may
be additional risks that the Company is currently unaware of or risks that Ahold's
management believes are immaterial or otherwise common to most companies, but which
may in the future have a material adverse effect on the Company's financial position,
results of operations, liquidity and the actual outcome of matters referred to in the forward-
looking statements contained in this Annual Report. For additional information regarding
forward-looking statements, see the Cautionary notice included in this Annual Report.
Ahold may not be able to successfully implement its strategy or may not achieve the
anticipated benefits due to adverse macro-economic conditions and competitive pressures.
Ahold's strategy for profitable and sustainable growth has several main areas of focus.
We have realigned our portfolio to focus on our core retail businesses in the United States
and Europe, building our individual retail banners into powerful local brands. We are using
our continental organizational structures to ensure that management decisions are made
at the most appropriate level and economies of scale and best practices can be effectively
leveraged to support our local operating companies. In addition, we are working to meet
our financial targets, including a €350 million cost reduction program and bringing a more
focused and coordinated approach to our Corporate Responsibility program. For more
information see Our strategy in this Annual Report. However, Ahold is subject to a number
of risks, mainly macro-economic and competitive, that may impair our ability to effectively
implement our strategy or realize the anticipated benefits.
The current global economic downturn has impacted all of the economies and markets in
which we operate. Rising unemployment, reduced consumer confidence and disposable
incomes and food and fuel price volatility can negatively affect customer demand and
may negate the results of investments we have made through our Value Improvement
Programs. The global financial crisis has restricted the availability of credit, which may
impact customer demand, cause the failure of key suppliers or otherwise disrupt our
supply chains, impacting the cost and availability of goods. As a result of the current
economic climate, our competitors are taking aggressive actions. These factors or other
unforeseen effects of the current economic climate could impair the effectiveness of
Ahold's strategy, reduce the anticipated benefits of our price repositioning and cost savings
programs or our other strategic initiatives and may have a material adverse effect on the
Company's financial position, results of operations and liquidity.
