How we manage risk (continued)
Ahold's principal risks and uncertainties
Description of risk Strategy
Key risk drivers
Risk mitigating actions
Potential consequence
Business model
Ahold at a glance
Business review
Governance
Ahold
Annual Report 2014 53
Business continuity (O) Better place to shop
Disruption of critical business processes may result
in non-availability of products for customers
- Dependency on IT systems
- Dependency on supply chain
- Centralized facilities
- Dependency on logistics service providers
- Dependency on suppliers of strategic
own-brand products and services
- Cyber threats
- Business continuity governance structure
- Business continuity strategic guidelines and
tactical policy
- Business continuity framework with guidance,
procedures and document templates
- Business continuity management plans
- Insurance program
While Ahold continues to maintain and invest in
business continuity management plans, business
interruptions could have a material adverse effect
on the Company's financial position, results
of operations, liquidity, customer perception
and reputation.
Collective bargaining (O) Better place to work
Ahold's businesses might not be able to negotiate
extensions or replacements on acceptable terms,
which could result in workstoppages
- Expiring collective bargaining agreements
- Relationships with the relevant trade unions
- Contract negotiation process
- Human Resource functions to support
relationships with trade unions
- Contingency plans
A work stoppage due to the failure of one or
more of Ahold's businesses to renegotiate a
collective bargaining agreement, or otherwise,
could be disruptive to our business, lead to
adverse publicity and have a material adverse
effect on the Company's results of operations and
financial position.
Competitive advantage and economic
conditions (S)
A weak macro-economic climate and changes to
the competitive landscape without appropriate
response could threaten Ahold's ability to achieve
its strategic business plan
- Price perception
- Consumer confidence and unemployment
- Consumers' purchasing power under pressure
- Changes in the retail landscape and
competition
- Lack of distinctiveness
- Inflationary forces impacting cost of goods sold
- Research and monitoring of consumer behavior
- Price benchmarking competition
- Analysis of economic developments
- Promotional activities
- Building more personalized customer
relationships
- Strengthening own brands
Ahold is focused on the execution of its strategic
pillars and promises. Unforeseen effects could
impair the effectiveness of Ahold's strategy
and reduce the anticipated benefits of its
price repositioning and cost savings programs
or other strategic initiatives. These factors
may have a material adverse effect on the
Company's financial position, results of operations
and liquidity.
For more information see Business review.
1 Risk objectives: strategic (S), operational (O), financial (F) and compliance (C) risks listed in alphabetical order.
