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92 2014 Registration Document
Corporate governance
3
Risk management
3.5
Risk management
In an uncertain, constantly changing environment, proactive risk
management is an essential part of sustainable development for our
business, and is an aim shared by all of our employees. This approach also
enables the review of all processes within the Company and identification
of opportunities and areas for improvement.
The risk management system implemented by the Group is primarily based
on identifying and accounting for risk factors which may have a significant
impact on its activities, its financial position and its image (3.5.1).
For the past several years, the Group has been committed to a coordinated
risk management policy based on risk mapping, rules and communication
of best practices, with a focus on prevention (3.5.2). The risk management
system is also presented in the section entitled “Chairman’s report on
internal control and risk management procedures” starting on page 100
of this Registration Document.
As part of a regular analysis and review of insurable risks, the Group also
implements solutions to transfer risks to the insurance market (3.5.3).
To manage difficult situations that may significantly impact its activities
or its image, the Group has also developed a comprehensive crisis
management system (3.5.4.).
3.5.1
Risk factors
The principal risk factors identified by the Group are presented below,
grouped into four themes: business environment, strategy and governance,
operations, and financial.
All listed risks may have an impact on the Group’s activities or its ability
to fulfil its objectives. There may also be other risks of which the Group
is unaware as of the date of this Document, or which may evolve with
significant negative consequences.
The system presented in 3.5.2 aims for comprehensive risk management
in order to avoid the occurrence of risks or limit their impact, through a
customized protection and prevention policy.
The management and oversight systems for each risk factor are briefly
stated.
3.5.1.1
Business environment
◗
Political and social environment
Some of the Group’s activities are exposed to risk and uncertainty in
countries which have experienced or may experience a period of political
or social instability or weak governance.
During the past several years the Group has developed country-specific
risk mapping which takes into account a number of indicators, is updated
annually and provides forward-looking monthly tracking, in order to support
decision making in the context of the Group’s international growth.
◗
Economic environment and market volatility
The economic situation in countries where the Group operates may affect
demand, spending levels and the purchasing habits of our customers,
increased by the instability and unpredictability of the global, national or
regional economic climate. Volatility in asset prices and the cost prices
of assets and products related to raw materials (agriculture, metals, fuel,
energy costs, etc.) may also impact sales, costs and balance sheet values.
Due to the nature of its activities, the Group pays particular attention to
monitoring and taking into account the changing economic climate and
future outlooks in the countries where it operates, specifically through a
number of studies and exchanges. Given the interdependence of activities
and the price sensitivity of Group customers, changes in market prices
are also taken into consideration at various levels, especially purchases
of merchandise and general and administrative expenses.
◗
Environment, pressure and regulatory changes
Regulations applicable to the Group in countries where it operates,
along with regulatory changes and actions taken by local, national and
international regulators, are likely to impact our activities and the Group’s
financial performance.
The local Legal department in each country is responsible for monitoring
regulations and taking them into consideration, under the coordination and
supervision of the Group Legal department. With a focus on anticipation
and optimal allocation of resources, the Group Legal department
has also developed and implemented a legal risk mapping process,
specifically taking into account the environment, pressure and regulatory
developments.
◗
Changes in the sector and the competitive
environment
Highly exposed to changes in consumer behaviour in a world of changing
technology, the retail sector is characterised by strong competitive
dynamics with saturated markets in Europe and relatively low margins.
This drives constant rapid changes within the sector, which could impact
the Group’s activity and performance.