Unilever 2015 Annual Report Download - page 61

DESRIPTION OF RISK WHAT WE ARE DOIN TO MANAE THE RISK
BRAND PREFERENE
As a branded goods busness, Unlever’s success depends
on the value and relevance of our brands and products to
consumers around the world and on our ablty to nnovate
and reman compettve
onsumer tastes, preferences and behavours are constantly
changng and Unlever’s ablty to antcpate and respond to these
changes and to contnue to dfferentate our brands and products
s vtal to our busness
We are dependent on creatng nnovatve products that contnue
to meet the needs of our consumers If we are unable to nnovate
effectvely, Unlever’s sales or margns could be materally
adversely affected
We contnuously montor external market trends and collate
consumer, customer and shopper nsght n order to develop
category and brand strateges
Our strategy focuses on nvestng n markets and segments whch
we dentfy as attractve because we have already bult, or are
confdent that we can buld, compettve advantage
Our Research and Development functon actvely searches for ways
n whch to translate the trends n consumer preference and taste
nto new technologes for ncorporaton nto future products
Our nnovaton management process deploys tools, technologes and
resources to convert category strateges nto proects and category
plans, develop products and relevant brand communcaton and
successfully roll out new products to our consumers
PORTFOLIO MANAEMENT
Unlever’s strategc nvestment choces wll affect the long-term
growth and profts of our busness
Unlever’s growth and proftablty are determned by our portfolo
of categores, geographes and channels and how these evolve
over tme If Unlever does not make optmal strategc nvestment
decsons then opportuntes for growth and mproved margn
could be mssed
Our ompass strategy and our busness plans are desgned to
ensure that resources are prortsed towards those categores
and markets havng the greatest long-term potental for Unlever
Our acquston actvty s drven by our portfolo strategy wth
a clear, defned evaluaton process
SUSTAINABILITY
The success of our busness depends on fndng sustanable
solutons to support long-term growth
Unlever’s vson to accelerate growth n the busness whle
reducng our envronmental footprnt and ncreasng our postve
socal mpact wll requre more sustanable ways of dong busness
Ths means reducng our envronmental footprnt whle ncreasng
the postve socal benefts of Unlever’s actvtes We are
dependent on the efforts of partners and varous certfcaton
bodes to acheve our sustanablty goals There can be no
assurance that sustanable busness solutons wll be developed
and falure to do so could lmt Unlever’s growth and proft potental
and damage our corporate reputaton
The Unlever Sustanable Lvng Plan sets clear long-term
commtments to mprove health and well-beng, reduce
envronmental mpact and enhance lvelhoods Underpnnng
these are targets n areas such as hygene, nutrton, sustanable
sourcng, farness n the workplace, opportuntes for women and
nclusve busness as well as greenhouse gas emssons, water and
waste These targets and more sustanable ways of operatng are
beng ntegrated nto Unlever’s day-to-day busness
Progress towards the Unlever Sustanable Lvng Plan s
montored by the Unlever Leadershp Executve and the Boards
The Unlever Sustanable Lvng Plan ouncl, comprsng sx
external specalsts n sustanablty, gudes and crtques the
development of our strategy
Takng account of the roup’s poston and prncpal rsks, the
Drectors assess the prospects of the roup by revewng and
dscussng at least once each year the annual forecast, the
three-year strategc plan and the roup rsk framework
Throughout the year the Drectors revew and dscuss the potental
mpact of each prncpal rsk as well as the rsk mpact of any
maor events or transactons A three-year perod s consdered
approprate for ths assessment because
• t s the perod covered by the strategc plan and
• t enables a hgh level of confdence, even n extreme adverse
events, due to a number of factors such as
– the roup has consderable fnancal resources together
wth establshed busness relatonshps wth many
customers and supplers n countres throughout the world
– hgh cash generaton by the roup’s operatons
– flexblty of cash outflow ncludng sgnfcant marketng
and captal expendture and
– the roup’s dverse product and geographcal operatons
Based on the results of ths analyss, the Drectors beleve that
the roup s well placed to manage ts busness rsks successfully
despte the current uncertan outlook The Drectors have a
reasonable expectaton that the roup wll be able to contnue
n operaton and meet ts labltes as they fall due over the
three-year perod of ther assessment
PRINIPAL RISK FATORS
Our busness s subect to rsks and uncertantes On the followng
pages we have dentfed the rsks that we regard as the most
relevant to our busness These are the rsks that we see as most
materal to Unlever’s busness and performance at ths tme
There may be other rsks that could emerge n the future We have
also commented below on certan mtgatng actons that we
beleve help us to manage these rsks However, we may not be
successful n deployng some or all of these mtgatng actons
If the crcumstances n these rsks occur or are not successfully
mtgated, our cash flow, operatng results, fnancal poston,
busness and reputaton could be materally adversely affected
In addton, rsks and uncertantes could cause actual results to
vary from those descrbed, whch may nclude forward-lookng
statements, or could mpact on our ablty to meet our targets or
be detrmental to our proftablty or reputaton
54 Unilever Annual Report and Accounts 2015Governance
RISKS ONTINUED