How we manage risk continued
Overview
Business review
Governance
Financials
Investors
Ahold Delhaize Annual Report 2016
Key risk drivers
Mitigating actions
Potential consequences
Our promises
I Risk objectives: strategic (S), operational (O), financial (F) and compliance (C) risks listed in alphabetical order.
Pension plan funding (F)
Ahold Delhaize 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
Merger Ahold Delhaize (S)
We could be unable to
realize the expected benefits
of the merger
Our sustainable
business model
Our sustainable
business model
Integration of the businesses more
difficult, costly or time consuming
than expected
Excessive workload and lack of focus
Key staff leaving the company
Insolvency or bankruptcy of
MEP participants
Low interest rates
Changing pension laws
Longevity
Increasing U.S. healthcare costs
Governance structure with
a Transformation Steering
Committee, direct Executive
Committee involvement and
Supervisory Board oversight
Integration management
office, plans and processes
Use of external specialists
Synergy targets
Governance structure
Yearly MEP risk
assessment study
Monitoring MEPs participants
A decrease in equity returns or interest rates may negatively
affect the funding ratios of Ahold Delhaize’s pension funds,
which could lead to higher pension charges and contributions
payable. According to Dutch law and or contractually agreed
funding arrangements, Ahold Delhaize may be required to
make additional contributions to its pension plans if 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 Delhaize and the
other participating employers. The bankruptcy of a
participating MEP employer could result in Ahold Delhaize
assuming a larger proportion of that plan’s funding
requirements
In addition, Ahold Delhaize 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
If Ahold Delhaize is unable to realize cost savings, synergies,
growth opportunities or other benefits, this could have a
material adverse effect on the Company’s reputation or have a
material adverse effect on Ahold Delhaize’s financial position
Ahold Delhaize’s principal risks and uncertainties1
Risk Strategic area
99
