Unilever 2012 Annual Report Download - page 43

40 Unilever Annual Report and Accounts 2012Report of the Directors About Unilever
RISKS continued
Descrpton of rsk What we are dong to manage the rsk
Unilever may face liquidity risk, i.e. difficulty in meeting its Group Treasury regularly monitors exposure to our banks,
obligations, associated with its financial liabilities. A material and tightening counter party limits where appropriate. Unilever
sustained shortfall in our cash flow could undermine Unilever’s actively manages its banking exposures on a daily basis.
credit rating, impair investor confidence and also restrict
Unilever’s ability to raise funds. We regularly assess and monitor counterparty risk in our
customers and take appropriate action to manage our exposures.
We are exposed to market interest rate fluctuations on our floating
rate debt. Increases in benchmark interest rates could increase Our pension investment standards require us to invest across
the interest cost of our floating rate debt and increase the cost a range of equities, bonds, property, alternative assets and cash
of future borrowings. such that the failure of any single investment will not have a
material impact on the overall value of assets.
In times of financial market volatility, we are also potentially
exposed to counterparty risks with banks, suppliers and customers. The majority of our assets, including those held in our ‘pooled’
investment vehicle, Univest, are managed by external fund
Certain businesses have defined benefit pension plans, most now managers and are regularly monitored by pension trustees
closed to new employees, which are exposed to movements in and central pensions and investment teams.
interest rates, fluctuating values of underlying investments and
increased life expectancy. Changes in any or all of these inputs Further information on financial instruments and capital
could potentially increase the cost to Unilever of funding the and treasury risk management is included in note 16 on pages
schemes and therefore have an adverse impact on profitability 116 to 120.
and cash flow.
Ethcal
Acting in an ethical manner, consistent with the expectations of Our Code of Business Principles (the ‘Code’) and our Code
customers, consumers and other stakeholders is essential for Policies govern the behaviour of our employees, suppliers,
the protection of the reputation of Unilever and its brands. distributors and other third parties who work with us.
Unilever’s brands and reputation are valuable assets and the Our processes for identifying and resolving cases of unethical
way in which we operate, contribute to society and engage with practice are clearly defined and regularly communicated
the world around us is always under scrutiny both internally and throughout Unilever. Data relating to instances of unethical
externally. Despite the commitment of Unilever to ethical business practice is reviewed by the Unilever Leadership Executive
and the steps we take to adhere to this commitment, there and by relevant Board committees and helps to determine the
remains a risk that activities or events cause us to fall short of allocation of resources for future policy development, training
our desired standard, resulting in damage to Unilever’s corporate and awareness initiatives.
reputation and business results.
Legal, Regulatory and Other
Compliance with laws and regulations is an essential part of The Code of Business Principles sets out our commitment to
Unilever’s business operations. complying with the laws and regulations of the countries in which
we operate. In specialist areas the relevant teams at global, regional
Unilever is subject to local, regional and global laws and or local level are responsible for setting detailed standards and
regulations in such diverse areas as product safety, product ensuring that all employees are aware of and comply with
claims, trademarks, copyright, patents, competition, employee regulations and laws specific and relevant to their roles.
health and safety, the environment, corporate governance,
listing and disclosure, employment and taxes. Our legal specialists are heavily involved in monitoring and
reviewing our practices to provide reasonable assurance that
Failure to comply with laws and regulations could expose Unilever we remain aware of and in line with all relevant laws and
to civil and/or criminal actions leading to damages, fines and legal obligations.
criminal sanctions against us and/or our employees with possible
consequences for our corporate reputation. Various mitigating processes exist within Unilever operating
systems that are designed to help mitigate other areas of risk
Changes to laws and regulations could have a material impact including terrorism, fiscal and other forms of regulatory change
on the cost of doing business. or economic instability.
Unilever is also exposed to varying degrees of risk and uncertainty
related to other factors including environmental, political, social
and fiscal risks. All these risks could materially affect Unilever’s
business. There may be other risks which are unknown to
Unilever or which are currently believed to be immaterial.