Taking the right risks knowingly
We have robust structures and processes in place to ensure the effective management of risks to our business, and are committed to the highest ethical standards in the conduct of our business.
The pace of change has increased markedly in our industry in recent years, and it is critical that our efforts in risk management and compliance keep up with and even anticipate these changes. However, efficiency and effectiveness in these areas also allows us to identify business opportunities to the benefit of all stakeholders.
Enterprise Risk Management
Risk taking is core to our innovation capacity, our entrepreneurial success and ultimately our sustained value creation.
Enterprise Risk Management (ERM) is the process of assessing, treating and monitoring the effects of uncertainty that may affect the attainment of Givaudan’s objectives, especially its publicly stated strategic objectives, or jeopardise Givaudan’s long-term business success. Managing risk is an integral part of Givaudan’s business. We operate a structured system of identifying, assessing and deciding on responses to mitigate key risks. Givaudan seeks to consciously take the appropriate amount of risk, to manage these risks competently at the right level of the organisation, and to seize related business opportunities.
Principles and responsibilities
Our ERM approach is based on our Enterprise Risk Management Charter, which was updated by the Board of Directors in 2017. The approach is compliant with applicable laws, SIX Directives, the Swiss Code of Best Practice for Corporate Governance and in line with best practice. Givaudan uses the COSO ERM: 2016 framework and ISO 31000 as references.
The ERM Charter describes the ERM principles, framework, process and methodology and governance and defines the associated roles and responsibilities and corresponding delegated authorities. It also lays down the framework for the reporting mechanism.
ERM applies to the Flavour and Fragrance businesses, as well as to support functions. It reviews all types of risks (threats and opportunities) in terms of their nature, their source and their consequences. For the top Company risks, the consequences are stated in terms of impact on the EBITDA of the Group.
In 2018, Givaudan continued monitoring and mitigation of the risks identified in the in-depth risk review process in 2017.
The current major risk areas continue to include the following:
|Strategic risks||Business model risk, risk of changes in consumer preferences, customer risk, competition risk|
|Sustainability risks||Risk of climate change / water scarcity|
|Operational risks||Disruption / breakdown of operations, disruption of supply chains / suppliers, EHS, information technology risk|
|Legal and regulatory risks||Product quality / product safety risk, legal and compliance risks|