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How we manage risk
Having a structured and consistent
approach to managing risks and
uncertainties is key to being able to
fulfill our stakeholders' expectations.
Risk management and internal control
Governance
Ahold at a glance I Business review
In order to meet our Reshaping Retail objectives,
Ahold needs to be agile and entrepreneurial to
respond quickly and effectively to rapid changes in
the retail landscape. Having a well-established and
embedded risk management approach benefits our
decision making processes to create and preserve
value. Managing risks and unpredictable conditions
in a timely way increases the likelihood that we
will achieve our business objectives, while ensuring
compliance with internal and external requirements.
Ahold strives for a culture of openness and
transparency in which identified risks are disclosed
proactively and unexpected events are reported as
soon as they occur. Risk management is an integral
part of responsible leadership.
Enterprise risk management
Ahold's enterprise risk management program is
designed to provide executive management with
an understanding of the Company's key business
risks and associated risk management practices.
Within each business, management identifies the
principal risks to the achievement of important
business objectives and the actions needed to
mitigate these risks. Senior executives periodically
review these risks and the related mitigation practices.
The findings are aggregated into an enterprise
risk management report that is presented to the
Executive Committee and the Supervisory Board.
Executive management is required to review the
principal risks and risk management practices with
the Executive Committee as a regular part of the
business planning and performance cycle. In turn, the
Executive Committee provides complementary insights
into existing and emerging risks that are subsequently
included in the program. Ahold's enterprise risk
management program influences the formation of
controls and procedures, the scope of internal audit
activities and the focus of the business planning and
performance process.
Risk appetite
Risk boundaries are set through our strategy, Code
of Conduct, bill of authority, budgets and policies.
Our risk appetite differs by objective category:
a Strategic
In pursuing our strategic ambition to grow, Ahold
is prepared to take risks in a responsible way that
takes our stakeholders' interests into account.
a Operational
The core promise of our Company: "better every
day," applies to the day-to-day running of our
businesses and describes our commitment to be a
better place to shop, a better place to work, and
a better neighbor. Risks related to our promises
should be in balance with the related rewards.
a Financial
With respect to financial risks, Ahold has a
prudent financing strategy, including a balanced
combination of self-insurance and commercial
insurance coverage. The Company is committed to
maintaining an investment grade credit rating.
a Compliance
At Ahold, an essential part of responsible retailing
is behaving according to our values. One of
Ahold's values is "Doing what's right," which
means that the Company and all its employees
are responsible for acting with honesty, integrity,
and respect for others. We strive to comply with
applicable laws and regulations everywhere we
do business.
Ahold
Annual Report 2014
Control framework
We maintain the Ahold Business Control Framework
(ABC Framework), which incorporates risk
assessment, control activities and monitoring into
our business practices at entity-wide and functional
levels. The aim of the ABC Framework is to provide
reasonable assurance that risks to achieving important
objectives are identified and mitigated. The ABC
Framework is based on the recommendations of
the Committee of Sponsoring Organizations of the
Treadway Commission (COSO ERM).
We have developed uniform governance and
control standards in areas such as ethical conduct,
agreements, accounting policies and product
integrity. These and other policies and procedures
are incorporated into the ABC Framework as
mandatory guidelines for all of Ahold's consolidated
entities. Local management is responsible for business
operations, including risk mitigation and compliance
with laws and regulations. Authority limits have
been established to ensure that all expenditures and
decisions are approved by the appropriate levels
of management.
