35
Operational risks
How we manage risk continued
Ahold
Annual Report 2010
Group at a glance
Performance
Fi nancials
Investors
Risks related to expansion
One of our strategic objectives is to expand by opening new stores in Europe and the United
States. Our ability to open new stores is dependent on whether we are able to purchase
properties or enter into leases on commercially reasonable terms for properties that are suitable
for our needs. If Ahold fails to secure property in a timely manner, its growth may be impaired.
Risk related to collective bargaining
A significant portion of Ahold's employees are represented by unions and are covered by
collective bargaining agreements. As the collective bargaining agreements with those unions
expire, Ahold might not be able to negotiate extensions or replacements on terms acceptable to
the Company. Although we consider our relations with the relevant trade unions to be stable and
have organized our human resource functions to support the Company's union relations and
collective bargaining negotiations, any failure to effectively renegotiate these agreements could
result in work stoppages or other organized labor actions. We may not be able to resolve any
issues in a timely manner and our contingency plans may not be sufficient to avoid an impact on
the business. A work stoppage due to the failure of one or more of Ahold's operating companies
to renegotiate a collective bargaining agreement, or otherwise, could have a material adverse
effect on the Company's financial position, results of operations, and liquidity.
Risks related to information security
Ahold's business operations generate and maintain confidential commercial and personal
information concerning customers, employees, suppliers, and the Company. Our information
security policy mandates that we implement and maintain controls, processes, and tools that
ensure confidentiality, privacy, and integrity of confidential and sensitive information. We also
manage and monitor compliance with our policy and with the various legal and regulatory
requirements. However, disclosure of confidential information to unintended third parties may
negatively impact Ahold's competitive position and corporate reputation or result in litigation or
regulatory action. This could have a material adverse effect on Ahold's financial position, results
of operations, and liquidity.
Risks related to business and IT continuity
A number of Ahold's critical business processes and functions are concentrated in a limited
number of centralized facilities and or are dependent on IT systems and infrastructure, key
personnel, outsourcing providers, and other key suppliers for which limited or no comparable
back-up is available. If any of these critical business processes or functions suffer a severe
disruption that renders such facilities, critical IT systems or infrastructure, key suppliers, or
key personnel unavailable, Ahold could experience disruption to its supply chain, store, and
administrative operations. We continue to invest in recovery plans and security initiatives for
the facilities and technology systems that support critical business processes and take steps
to mitigate the dependency risks associated with our key strategic suppliers. However, these
measures cannot fully prevent business interruptions that could have a material adverse effect
on Ahold's financial position, results of operations, and liquidity.
Risks related to food and non-food safety
The growing internationalization of the supply chain, the increasing sale of own-brand products,
including vegetables and other non-branded products, in Ahold's stores, along with increased
regulation, continue to make food and non-food safety one of the Company's most significant
business risks. We have food and non-food safety policies and practices in place for our own-
brand products, covering the supply chain from the final production stage through to our own
operations. However, Ahold may face food and non-food safety problems, including disruptions
to the supply chain caused by food-borne illnesses and negative consumer reaction to any
incidents, which may have a material adverse effect on the Company's reputation, sales, financial
position, results of operations, and liquidity.
