Arla Foods Consolidated Annual Report 2021
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Arla Foods Consolidated Annual Report 2021 Risk and Compliance / Risk overview - Major risks
RISK OVERVIEW
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MAJOR RISKS
Contents
Impact
Global political and economic volatility
In recent years there has been significant
instability in the global economic and political
landscape, with Covid-19 significantly increasing
general volatility.As a global company, Arla is
exposed to these trends and events as they
affect demand for dairy, international trade
relations, the movement of goods and services,
and have severe effect on exchange rates and
commodity prices. In 2021, the economic
impacts of Covid-19 exacerbated uncertainty,
while the unprecedented inflation partly caused
by the fast economic rebound challenged our
margins and put a strain on our owners. Labour
shortages and other supply chain disruptions,
and the swings in demand between retail and
supply chain also posed challenges to Arla this
year. These turmoils are likely to continue into
2022 as well.
Mitigating actions
With Arla's broad international footprint and
agile supply chain, we are set up to deal with the
global political and economic volatility. To
address the impacts of Covid-19 in particular, a
dedicated crisis management team worked with
various planning scenarios throughout 2021.
This also enabled us to adapt quickly when
inflation hit. From a supply chain perspective,
accurate forecast was key. With regard to utilities
and ingredients, hedging principles are part of
planning to accommodate inflation.
Impact
Quality, health and safety risks
We have a complex and long value chain, with
thousands of employees producing a large
variety of products. Ensuring that our products
are safe to consume and are appropriately
labelled, and keeping our employees safe and
healthy are key to the success of Arla. Major
product quality and/or food safety issues may
lead to a loss of brand reputation and decreased
trust in our products. Furthermore, downgrade
of products may lead to financial losses. During
the past two years the pandemic posed a risk to
the health of our employees, and increased
absence due to falling ill/the need to isolate
challenged our ability to deliver products.
Mitigating actions
Food safety and compliance with health and
safety regulations is a top priority across our
supply chain and commercial business. We are
constantly improving our quality and food safety
management programmes which are driven
from a central QEHS department. In 2021 we
focused on further implementation of the Arla
QEHS Manual and Arla Food Safety Mandatory
standards, as well as obtaining food safety
certification from a third party. Regarding
Covid-19, we conducted risk assessments at all
offices and production locations and applied
adequate measures, including social distancing,
increased frequency of cleaning, possibility of
working from home, limitation on travel, etc. to
avoid spreading the virus.
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