6)1
How we manage risk (continued)
Ahold's principal risks and uncertainties1
Pension plan funding 0
Strategic initiatives
Ahold at a glance
Business review
Governance
Ahold
Annual Report 2015
Risk Strategic area
Key risk drivers
Mitigating actions
Potential consequences
Ahold is exposed to the financial
consequences of a number of defined
benefit pension plans covering a
large number of its associates in
the Netherlands and in the United
States, as well as multi-employer plans
(MEP) covering both pensions and
other benefits
Business model
a Insolvency or bankruptcy
of MEP participants
a Decreasing interest rates
a Poor stock market performance
a Changing pension laws
a Longevity
a Increasing U.S. healthcare costs
a Governance structure
a Yearly MEP risk assessment study
a Monitoring MEPs participants
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
associates 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.
associate 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.
Activities are increasingly undertaken in
the form of projects. Ahold might not be
able to deliver on the objectives of its
strategic projects
Our pillars promises
a Changing retail environment
a Dependencies between projects
and operational activities
a Availability of required capabilities
a Ahold's Executive Committee
governance structure
a Approved strategies
a Program and project management
a Promises reporting
a Embedding pillars and promises
in the business
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.
1 Risk objectives: strategic (s operational financial (f and compliance (c risks listed in alphabetical order.
