## High risks 2014 

The Carlsberg Group’s Executive Committee has identified three high risks facing the Group in 2014. These risks were assessed to be placed in the upper-right quartile of the risk heat map. 

## ECONOMIC SLOWDOWN 

## Description 

The economic slowdown of recent years continues, particularly in Western Europe. But slower growth is also evident in Eastern Europe and some Asian countries. 

## Possible impact 

Slower economic growth particularly impacts emerging markets, including Eastern Europe, where there is a clear correlation between GDP growth and growth in beer consump- tion. However, in the mature markets of Western Europe the challenging macroecon- omy has also had a negative impact on beer consumption. Declining or slower growth in beer consumption may negatively impact the Group’s net revenue and operating profit. 

## Mitigation 

We continuously monitor the macroeconomic health of our markets and will continue to take actions to reduce the impact of the ad- verse economic environment. Mitigating fac- tors and actions include our broad portfolio of beer, which caters to different price segments, and the active diversification of our portfolio outside beer, for example the Somersby cider brand. From a cost perspective, we apply a systematic and focused approach to allocate our resources to fewer things with the highest impact. The many efficiency initiatives across the business will also reduce the cost base. 

## IMPLEMENTATION OF BSP1 

## Description 

2013 was the first year of the three-year implementation period of the supply chain integration and business standardisation project (BSP1). The project is a key enabler for the transformation of the operating model in Western Europe and will lead to increased speed, optimised asset utilisa- tion and improved capabilities. The project will yield significant long-term benefits in Western Europe. 

## Possible impact 

Rolling out the BSP1 project requires signifi- cant resources and entails substantial imple- mentation costs. If the implementation of the project or the adoption of the new oper- ating model fails, this could have a negative impact on regional and Group earnings. 

## Mitigation 

In order to reduce the risk of not being able to manage the BSP1 implementation and the business transformation, a number of activi- ties are ongoing, including: post go-live assessment of ways of working to identify issues and create solutions; accumulating and adapting to lessons learned from past roll- outs; securing key resources across the mar- kets; and, when and if appropriate, reorganising the BSP1 teams to ensure clear responsibilities at all times during the roll-out period. 

## IMPACT AND SPEED OF LARGE GROUP PROJECTS 

## Description 

In addition to the BSP1 project, the Carlsberg Group is running a number of large structural and efficiency projects to reduce the overall cost base of the Group. Another large project in 2014 will be the integration of the newly acquired Chongqing Brewery. 

## Possible impact 

In light of the challenging economic environ- ment in many of the Group’s markets, the structural, efficiency and integration projects represent important levers for growing Group operating profit. Failure to successfully implement the projects therefore represents a risk to achieving the Group’s financial ambitions. 

## Mitigation 

To ensure the development and implementa- tion of the large Group projects, they are the focus of attention for top management. In addition, the Group has adopted a rigid and systematic approach to closely monitor and track the status of key initiatives, includ- ing progress versus plan, issues, risks and savings. Where relevant, KPIs are linked to project performance. 

