Arla Foods Consolidated Annual Report 2021

59 Arla Foods Consolidated Annual Report 2021 / Risk and Compliance / Risk overview - Critical risks RISK OVERVIEW - CRITICAL RISKS Contents Impact Consumer trends Constant transformation of consumer prefer- ences is a given in the FMCG industry, but the fast pace and the volatility of these trends could significantly affect our sales. Currently two major trends shape the business: consumers are pushing for more sustainable products, and they are shopping for their groceries online more and more frequently Mitigating actions We continuously monitor consumer trends from shopping habits to flavour preferences, and cater for them whenever possible. As part of our our new Future26 strategy, we are developing more sustainable packaging and products, and working on significantly lowering our food waste. To capitalize the growing channel of online grocery shopping, in 2021, we continued to build on our partnerships across the grocery channel and invested in people and technology. Impact Climate-related regulations As an agricultural business Arla is effected by climate from various perspectives. Changing weather patterns and forthcoming regulations and policies to mitigate climate change can both have a significant impact on our milk volumes and/or on our profitability. Particularly, the EU's climate and Farm to Fork strategies could define emission reduction requirements that we can only comply with by reducing volumes or by imposing significant cost on the business, or our farmer owners. Mitigating actions We are closely following the EU's climate and Farm to Fork strategy implementation and contribute with insights for constructive policy making. In anticipation of forthcoming emission reduction regulations, our new strategy, Future26 introduced ambitious climate targets to significantly lower our carbon footprint across our value chain. To achieve these targets we are working in close collaboration with our farmer owners, who in 2021 received detailed action plans for emission reduction, based on their current performance measured by our Climate Checks programme. Impact Information security and cyber attacks We see a growing trend in crimeware targeting manufacturing companies, and also a sharp increase of attacks on our business partners, which keeps the risk of a major cyber-attack high. Such an attack could potentially damage our ability to manufacture, deliver and sell our products if critical supporting systems are disrupted. Mitigating actions In 2021, we continued to strengthen our processes around mitigating IT security vulnerabilities and deployed a broad framework of integrated tools, which gave us enhanced capabilities to identify threats and react promptly. We also observed significantly improved employee behaviour in cybersecurity awareness simulations and trainings. |||

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