Unilever 2013 Annual Report Download - page 37

The followng dscusson of the rsk outlook and our prncpal
rsk management actvtes ncludes ‘forward-lookng’
statements that reflect Unlever’s vew of the operatng rsk
envronment. The actual results could differ materially from
those projected. See the ‘Cautionary statement’ on the inside
back cover.
OUTLOOK
Market condtons for our busness were agan challengng n 2013
and we do not antcpate ths changng sgnfcantly n 2014
Economc pressures are expected to contnue Consumer demand
in emerging markets has slowed and is expected to remain
subdued in 2014. In developed market economies, there are signs
of gradual recovery, but any improvement in consumer demand is
likely to be slow and muted and shoppers will remain focused on
value. While the greatest pressures in the Eurozone have reduced,
they have not been permanently resolved and economic and
political risks remain.
Currency markets remain volatile and uncertain. Commodities
markets have been relatively stable during 2013 but we remain
watchful of potential volatility in 2014. Terrorist activity and
political unrest may also result in business interruptions and
a decreased demand for our products.
The competitive environment for our business is likely to remain
intense in 2014. Our competitors, both global and local, will
continue to shift resources into emerging markets. We expect
continued high levels of competitive challenge to our many
category leadership positions. Some of this may be price based,
but we also expect strong innovation based competition. With the
improvements we have been making, and continue to make, to our
business we are well prepared for these challenges.
Our plans give us confidence that Unilever can continue to deliver
against the objectives we have set out: volume growth ahead of
our markets, steady and sustainable improvement in core
operating margin and strong cash flow.
OUR RISK APPETITE AND APPROACH
TO RISK MANAGEMENT
Risk management is integral to Unilever’s strategy and to the
achievement of Unilever’s long-term goals. Our success as an
organisation depends on our ability to identify and exploit the
opportunities generated by our business and the markets we
are in. In doing this we take an embedded approach to risk
management which puts risk and opportunity assessment
at the core of the leadership team agenda, which is where
we believe it should be.
Unilever adopts a risk profile that is aligned to our vision to double
the size of our business while reducing our environmental footprint
and increasing our positive social impact. Our available capital and
other resources are applied to underpin our priorities. We aim to
maintain a strong single A credit rating on a long-term basis.
Our approach to risk management is designed to provide
reasonable, but notabsolute, assurance that our assets are
safeguarded, the risks facing the business are being assessed and
mitigated and all information that may be required to be disclosed
is reported toUnilever’s senior management including, where
appropriate, the Chief Executive Officer and Chief Financial Officer.
ORGANISATION
The Unilever Boards assume overall accountability for the
management of risk and for reviewing the effectiveness of
Unilever’s risk management and internal control systems.
The Boards have established a clear organisational structure
withwell defined accountabilities for the principal risks that
Unilever faces in the short, medium and long term. This
organisational structure and distribution of accountabilities
and responsibilities ensures that every country in which we
operate has specific resources and processes for risk review
and risk mitigation. This is supported by the Unilever Leadership
Executive, which takes an active responsibility for focusing on the
principal areas of risk to Unilever. The Boards regularly review
these risk areas, including consideration of environmental, social
and governance matters, and retain responsibility for determining
the nature and extent of the significant risks that Unilever is
prepared to take to achieve its strategic objectives.
FOUNDATION AND PRINCIPLES
Unilever’s approach to doing business is framed by our Corporate
Purpose. Our Code of Business Principles sets out the standards
of behaviour that we expect all employees to adhere to. Day-to-
day responsibility for ensuring these principles are applied
throughout Unilever rests with senior management across
categories, geographies and functions. A network of Code
Officers and Committees supports the activities necessary to
communicate the Code, deliver training, maintain processes and
procedures (including ‘hotlines’) to report and respond to alleged
breaches, and to capture and communicate learnings.
We have a framework of Code Policies that underpin the Code of
Business Principles and set out the non-negotiable standards of
behaviour expected from all our employees.
For each of our principal risks we have a risk management
framework detailing the controls we have in place and who is
responsible for both managing the overall risk and the individual
controls mitigating that risk.
Unilever Annual Report and Accounts 201334 Strategic report
RISKS