List of Risks

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 Type of Risks Explanation Risk Mitigation
1 Treasury

Changes to the relative value of a currency can fluctuate widely and could have a significant impact on business results. Currency rates, if not stable, can also result in significant swings in the prices of the raw materials needed to produce our goods.

Currency exposures are managed within prescribed limits and by the use of forward foreign exchange contracts. Apart from contracts, we also hedge some of our exposures through the use of foreign currency borrowing or forward exchange contracts.

2 Brand Preference

Consumer tastes and behaviours are constantly changing. We have to be capable to anticipate and respond to these changes and to continue to differentiate our brands and products. We are dependent on creating innovative products that meet the needs of our consumers.

We continuously monitor external market trends and collate consumer, customer and shopper insight in order to develop categories and brand strategies that fits the need of our consumers.

Our Research and Development function actively searches for ways in which to translate the trends in consumer preference and taste into new technologies for incorporation into future products.

3 External Economy

Constantly changing economic conditions may result in reduced consumer demand for our products and may affect one or more countries within a region, or even globally.

Government actions, such as fiscal stimulus, changes to taxation, and price controls can impact the growth and profitability of our local operations.

The breadth of Unilever’s portfolio and our flexible business model allows us to adapt our portfolio and respond quickly to develop new offerings that suit consumers’ and customers’ changing needs during economic downturns.

We regularly update our forecast of business results and cash flows and, where necessary, rebalance investment priorities.

4 Legal and Regulatory

Unilever is subject to 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.

Failure to comply with the applicable regulations could expose Unilever to civil and/or criminal actions leading to damages, fines and sanctions. These could affect our corporate reputation, and our cost of doing business

Unilever is committed to complying with the applicable 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.

Our legal and regulatory specialists are heavily involved in monitoring and reviewing our practices to provide reasonable assurance that we remain aware of and in line with all relevant laws and legal obligations.

5

Industrial Relations

With constant changes in the labour regulation, we have an obligation to maintain good relationship with our employees and labour union. Disruptions to the issue could affect our operations, costs and reputation.

To mitigate this risk, we constantly keep update with the changes in labour regulation and maintain a good communication with our labour union. Regular discussion is periodically done to better understand each interest and keep the harmonisation within the industrial stakeholders.

6

Talent and People

Our ability to attract, develop, and retain the right number of appropriately qualified people is critical if we are to compete and grow effectively.

In an emerging country, there can be a high level of competition for a limited talent pool. The loss of management or other key personnel or the inability to identify, attract or retain qualified personnel could make it difficult to manage the business and could adversely affect operations and financial results.

Resource committees have been established and implemented throughout our business. These committees have the responsibility to identify future skills and capability needs, develop career paths and identify the key talent and leaders of the future.

We have an integrated management development process which includes regular performance reviews underpinned by a common set of leadership behaviours, skills and competencies.

In addition, we have also implemented targeted programmes to attract and retain top talent and actively monitor our performance in retaining talent within Unilever.

7

Systems and Information

We interact electronically with customers, suppliers, and consumers in ways which place ever greater dependence on the need for secure and reliable IT systems and infrastructure.

A disruption of our IT systems could inhibit our business operations in a number of ways, including hampering our sales, production, and cash flow cycle.

Limitation of access to confidential information as well as segregation of duties are also among our highest priorities

Limitation of access to confidential information as well as segregation of duties are also among our highest priorities

Limitation of access to confidential information as well as segregation of duties are also among our highest priorities

We have policies covering the protection of both business and personal information, as well as the use of IT systems and applications by our employees, in which they are trained to understand these requirements.

We have standardised ways of hosting information on our public websites and have systems in place to monitor compliance with appropriate privacy laws and regulations, and with our own policies.

8

Safe and High Quality Products

Unilever Indonesia’s manufacturing process is also exposed to 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.

Our product quality processes and controls are comprehensive, from end to end, from product design to customer shelf. They are verified annually, and regularly monitored through performance indicators that drive continuous improvement activities. Our key suppliers are externally certified and the quality of material received is regularly monitored to ensure that it meets the rigorous quality standards that our products require.

In the event of an incident relating to the safety of our consumers or the quality of our products, incident management teams are activated in the affected markets under the direction of our product quality, science, and communications experts, to ensure timely and effective market place action.


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