Organisation of risk management

Risk Management Advisory Board

The Executive Board is assisted by a Risk Management Advisory Board. The Risk Management Advisory Board evaluates risk exposure and advises both the Executive Board and the operating companies’ managements on risk exposure as well as on the set-up and effect of the implemented control measures. The Risk Management Advisory Board met five times during the year under review. A report of these meetings has been presented to the Executive Board and the Audit Committee. The Risk Management Advisory Board always comprises the CFO, Group Controller, Group Treasurer, Corporate Secretary and Group Audit Manager. Specific business know-how is provided by business management or external experts who are invited to attend the meeting.

During 2009 the Risk Management Advisory Board paid considerable attention to the main risk areas and management processes related to the purchase of raw materials, including the use of derivative financial instruments, such as options and futures, and the accounting of such instruments. Particular attention was paid to improving the risk reporting system and effectively monitoring follow-up actions by corporate and business units.

Risk Management Model

Within Nutreco risk management is based on a risk management model which is utilised by all business operations throughout the Group. The model provides management of operating company tools to identify, classify, report and monitor risks at a business level. The risk monitoring results are reported during the quarterly business review meetings and are presented to the Executive Board for evaluation. The model has been integrated into the existing planning and control cycle. During 2009 the existing risk management model was improved by a further harmonisation of periodical risk reporting by the different business units.

The strategic, operational, financial and compliance risks that could have the greatest adverse affect on the full achievement of Nutreco’s objectives are described in more detail overleaf. This is not an exhaustive list. There may be risks that have currently been categorised as not having a significant impact on the business but which the Company has not yet fully assessed. These risks could, however, develop into major risks. The objective of the Company’s risk management systems is to highlight such incidents in time.

The table below summarises the risks that are currently considered to be the most significant.