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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 so
that we can 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
help us 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.
We strive 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 associates
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 2015
Control framework
We maintain the Ahold Business Control House
(ABC House), which incorporates risk assessment,
control activities and monitoring into our business
practices at entity-wide and functional levels.
The aim of the ABC House is to provide reasonable
assurance that risks to achieving important objectives
are identified and mitigated. The ABC House 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 House as mandatory
guidelines for all of Ahold's consolidated entities.
Local management is responsible for business
operations, including risk mitigation and compliance
with laws, regulations and internal requirements.
Authority limits have been established to ensure
that all expenditures and decisions are approved
by the appropriate levels of management.