BsimEiHHta
55
How we manage risk (continued)
Ahold's principal risks and uncertainties
Description of risk
Strategy
Business model
Key risk drivers
Risk mitigating actions Potential consequence
Ahold at a glance
Business review
Governance
Pension plan funding (F)
Ahold is exposed to the financial consequences
of a number of defined benefit pension plans
covering a large number of its employees in the
Netherlands and in the United States, as well
as multi-employer plans (MEP) covering both
pensions and other benefits
- I nsolvency or bankruptcy of MEP participants
- Decreasing interest rates
- Poor stock market performance
- Changing pension laws
- Longevity
- Increasing U.S. healthcare costs
Strategic projects (S) Our promises - Changing retail environment
Activities are increasingly undertaken in the form and Pillars i i t i
t .ill i I li ii uiiu pinuia - Dependencies between projects and
of projects. Ahold might not be able to deliver
operational activities
on the objectives of its strategic projects
- Availability of required capabilities
1 Risk objectives: strategic (S), operational (O), financial (F) and compliance (C), risks listed in alphabetical order.
Ahold
Annual Report 2014
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
- Ahold's Executive Committee (ExCo)
governance structure
- Program and project management
- Promises reporting
- Embedding pillars and promises in
the business
- Governance structure
- Yearly MEP risk assessment study
- Monitoring MEPs participants
Ahold is continuing with its strategy to reshape
the way we do business and drive growth.
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.
