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How we manage risk (continued)
Ahold's principal risks and uncertainties1
Strategy
Description of risk
Key risk drivers
Risk mitigating actions
Potential consequence
Ahold at a glance
Our strategy
Our performance
Governance
Financials
Investors
r
Ahold Annual Report 2013 66
Business
model
Pension plan funding (F)
Ahold is exposed to the financial consequences
of various pension and health care risks
- Insolvency or bankruptcy of Multi-employer
pension plan (MEP) participants
- Decreasing interest rates
- Poor stock market performance
- Changing pension laws
- Increasing U.S. healthcare costs
- Governance structure
- Yearly MEP risk assessment study
- Restructuring healthcare and pension
plans (see Note 23 to the consolidated
financial statements)
- Monitoring MEPs participants
Ahold has a number of defined benefit pension
plans covering a large number of its employees
in the Netherlands and in the United States.
A decrease in equity returns or interest rates may
negatively affect the funding ratios of Ahold's
pension funds, which could lead to higher
pension charges and contributions payable.
According to Dutch law and or contractually
agreed funding arrangements, Ahold may
be required to make additional contributions
to its pension plans in case minimum funding
requirements are not met.
In addition, a significant number of union
employees in the United States are covered by
MEPs. An increase in the unfunded liabilities
of these MEPs may result in increased future
payments by Ahold and the other participating
employers. The bankruptcy of a participating
MEP employer could result in Ahold
assuming a larger proportion of that plan's
funding requirements.
In addition, Ahold may be required to pay
significantly higher amounts to fund U.S.
employee healthcare plans in the future.
Significant increases in healthcare and pension
funding requirements could have a material
adverse effect on the Company's financial
position, results of operations and liquidity.
For additional information, see Note 23 to the
consolidated financial statements
Our Strategic projects (S)
promises Ahold might not be able to deliver on the
and pillars objectives of its strategic projects
- Growth strategy
- Changing retail environment
- Dependencies between projects and
operational activities
- Availability of required capabilities
- Ahold's new Executive Committee (ExCo)
governance structure
- Ownership of strategic pillars at ExCo level
- Pillar program and reporting
- Promises reporting
1 Risk objectives: strategic (S), operational (O), financial (F) and compliance (C), risks listed in alphabetical order.
Ahold is continuing with its strategy to reshape
the way we do business and drive growth.
Activities are increasingly undertaken in the form
of projects.
If the Company is not able to deliver on the
objectives of its underlying strategic projects, the
realization of key elements of its strategy may
be at risk. This could have a material adverse
effect on Ahold's financial position, results of
operations and liquidity
