Pepsi 2014 Annual Report Download - page 59

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39
Our Business Risks
We are subject to risks in the normal course of business. During 2014 and 2013, certain countries in which
our products are sold operated in a challenging environment, experiencing unstable economic and political
conditions, civil unrest, debt and credit issues, and currency fluctuations. We continue to monitor the
economic, operating and political environment in these markets closely and have identified actions to
potentially mitigate the unfavorable impact, if any, on our future results. See also “Risk Factors” in Item 1A.,
“Executive Overview” above and “Market Risks” below for more information about these risks and the
actions we have taken to address key challenges.
Risk Management Framework
The achievement of our strategic and operating objectives involves taking risks. To identify, assess, prioritize,
address, manage, monitor and communicate these risks across the Company’s operations, we leverage an
integrated risk management framework. This framework includes the following:
• PepsiCo’s Board of Directors has oversight responsibility for PepsiCo’s integrated risk management
framework. One of the Board’s primary responsibilities is overseeing and interacting with senior
management with respect to key aspects of the Company’s business, including risk assessment and
risk mitigation of the Company’s top risks. The Board receives updates on key risks throughout the
year. In addition, the Board has tasked designated Committees of the Board with certain categories
of risk management, and the Committees report to the Board regularly on these matters.
The Audit Committee of the Board reviews and assesses the guidelines and policies governing
PepsiCo’s risk management and oversight processes, and assists the Board’s oversight of
financial, compliance and employee safety risks facing PepsiCo; and
The Compensation Committee of the Board periodically reviews PepsiCo’s employee
compensation policies and practices to assess whether such policies and practices could lead
to unnecessary risk-taking behavior.
• The PepsiCo Risk Committee (PRC), which is comprised of a cross-functional, geographically
diverse, senior management group, meets regularly to identify, assess, prioritize and address our top
strategic, financial, operating, business, compliance, safety, reputational and other risks. The PRC
is also responsible for reporting progress on our risk mitigation efforts to the Board;
• Division Risk Committees (DRC), comprised of cross-functional senior management teams, meet
regularly to identify, assess, prioritize and address division-specific business risks;
• PepsiCo’s Risk Management Office, which manages the overall risk management process, provides
ongoing guidance, tools and analytical support to the PRC and the DRCs, identifies and assesses
potential risks and facilitates ongoing communication between the parties, as well as with PepsiCo’s
Board of Directors and the Audit Committee of the Board;
• PepsiCo’s Corporate Audit Department evaluates the ongoing effectiveness of our key internal
controls through periodic audit and review procedures; and
• PepsiCo’s Compliance & Ethics Department leads and coordinates our compliance policies and
practices.