We believe that we had identified and assessed relevant business risks regularly. Below is the explanation of each principal and relevant risk, as well as the risk mitigation:
No | Risks | Description | Risk Review and Mitigation |
|---|---|---|---|
1 | Treasury | The relative value of a currency can fluctuate widely and could have a significant impact on business performance. Unstable currency rates can also result in fluctuation in the prices of the raw materials needed to produce the Company’s goods. | Currency exposures are managed within prescribed limits and by the use of forward foreign exchange contracts. Apart from the contracts, the Company also hedges some exposures through the use of foreign currency loan or forward exchange contracts. |
2 | Brand Preference | Consumer tastes and behaviors are constantly changing. The Company must be able to anticipate and respond to these changes and to continue to differentiate its brands and products. The Company is dependent on creating innovative products that meet the needs of our consumers. | The Company continuously monitors external market trends and collates insights from consumers, customers, and shoppers in order to develop categories and brand strategies that meet the needs of consumers. The Company’s Research and Development division actively searches for ways to translate consumer preference and taste into new technologies to develop future products. |
3 | External Economy | Ever-changing economic conditions may result in a decline in consumer demand for the Company’s products and may affect one or more countries within a region, or even globally. The Government actions, such as fiscal stimuli, changes in taxation, and price controls can bring impact to the growth and profitability of Unilever’s local operations. | The breadth of the Company's portfolio and its flexible business model allows it to adapt its portfolio and respond quickly to develop new innovations that suit the changing needs of consumers and customers during economic downturn. |
4 | Legal Aspect and Regulatory | The Company is subject to prevailing local, regional, and global laws and regulations in such diverse areas as product safety, product claims, trademarks, copyright, patents, competition, employee health and safety, the environment, corporate governance, listing and disclosure, employment, and taxes. | The Company is committed to complying with the prevailing laws and regulations in Indonesia. In specialist areas, the relevant teams at global, regional or local levels are responsible for setting detailed standards and ensuring that all employees are aware of and comply with regulations and laws specific and relevant to their roles. The Company’s legal and regulatory specialists are heavily involved in monitoring and reviewing its practices to provide reasonable assurance that it remains aware of and in line with all relevant laws and legal obligations. |
5 | Industrial Relations | With constant changes in labour regulations, the Company has an obligation to maintain good relationships with its employees and labour union. Disruptions could affect Company’s operations, costs and reputation. | To mitigate this risk, the Company keeps up to date with changes in labour regulations and maintains good communications with the labour union. Regular discussions take place periodically to better understand each interest and maintain harmony among industry stakeholders. |
6 | Talent and Employees | The Company’s ability to attract, develop, and retain the right number of appropriately qualified people is critical so it can compete and grow effectively. In an emerging country, there can be a fierce competition for a limited talent pool. The shortage of personnel at management level or other key positions or the inability to identify, attract or retain qualified personnel could complicate business management and could adversely affect operations and financial results. | The Company has established a human resource committee. The committee is responsible for identifying future skills and capability needs, developing career paths and identifying the key talent and future leaders. The Company has an integrated management development process, which includes regular performance reviews underpinned by a common set of leadership behaviors, skills and competencies. In addition, the Company has also implemented targeted programs to attract and retain top talent and have been actively monitoring its performance in 296 retaining talent. |
7 | Systems and Information | The Company has a great deal of electronic interaction with customers, suppliers, and consumers, which prioritise the need for secure and reliable IT systems and infrastructure. A disruption to IT systems could inhibit our business operations in a number of ways, including hampering sales, production, and cash flow cycle. Ensuring restrictions on access to confidential information, given the risk of hacking, as well as a strict separation of duties are also among the Company’s highest priorities. | The Company uses a global system for the control and reporting of access to its vital IT systems. The system is supported by an annual program of testing of access controls. The Company has policies to protect both business and personal information, as well as to regulate the use of IT systems and applications by employees, who are trained to understand these policies. We regularly test employee awareness through phishing emails to increase awareness on cyber security. The Company complies with Unilever's global standardised ways of hosting information on its public websites and has systems in place to monitor compliance with its policies, and prevailing laws and regulations on privacy. To maintain the system in real time, the Company maintains two network links: primary and secondary. The Company maintains a data centre/server at a different site and has a Disaster Recovery Plan in place for each key risk. |
8 | Safe and High Quality Products | The Company's manufacturing processes mitigate and prevent the risk of accidental or malicious contamination of materials or other product defects. These risks can be due to human error, equipment failure or other factors. | The Company’s product quality processes and controls are comprehensive, from end to end, from designing the products to ensuring the display at store shelves. We verify the processes and controls annually, and regularly monitor them through performance indicators that drive continuous improvement. The Company’s key suppliers are externally certified, and the quality of material received is regularly monitored to ensure that it meets the rigorous quality standards required of Unilever products. In the event of an incident relating to the safety of our consumers or the quality of our products, we will deploy incident management teams under the direction of the Company’s product quality, science, and communications experts, to ensure timely and effective marketplace action. |
9 | Supply Chain | Purchasing materials, efficient manufacturing and distributing products promptly to Unilever customers are essential elements of the Company’s business. The Company’s supply chain is exposed to potentially adverse environmental events, industrial accidents, and other physical disruptions that could affect its ability to deliver products to customers. | The Company’s contingency plans are designed to enable alternative supplies of key materials to be secured, as well as substitute materials used in product formulations and recipes. The plans also assure that the Company has the flexibility to transfer or share production between manufacturing sites. The Company has policies and procedures in place to ensure the health and safety of its employees and the products in its facilities, as well as business continuity plans and disaster recovery plans to address major incidents. |
10 | Portfolio Management | The sustainable growth and profitability of the Company’s business depends on the strength and continuous development of the category, geography, and channel portfolios. If the Company does not continue to make sound, strategic investments, it may lose opportunities for further margin growth. | The Company’s business strategies and plans are designed to ensure that resources are focused on areas where they will have optimal impact, i.e. the categories and markets that have the greatest long-term potential for the business. Acquisition activities are determined by the Company’s portfolio strategy and depend on a clear, well-defined evaluation process. |
11 | Customer Relationships | Successful customer relationships are essential for our sustained business growth. Maintaining strong relationships with existing customers and building relationships with new customers who serve changing shopper habits are necessary to ensure our brands are well presented to consumers and available for purchase at all times. Strong Company’s customer relations also affect its ability to obtain pricing and beneficial cooperation agreements. Failure to maintain strong relationships with customers could negatively impact the Company’s cooperation agreements with the affected customers and reduce the availability of the Company’s products to consumers. |
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