Managing Enterprise Risk

Modern businesses face risks of growing complexity. In 2003, Coca-Cola Enterprises adopted an enterprise risk management approach that includes financial, operational, social, environmental and ethical considerations. We also identified six categories that significantly influence our business environment including: Reputation and Image, Business and Operations, Political and Regulatory, Market and Financial, Information Technology and Business Process Change, and People and Organization.

By identifying these risks and the potential consequences they could have on our business, we can proactively focus on these areas and identify ways to more effectively manage their impact on our operations. For instance, as consumers seek ways to manage their overall health and wellness, we are seeing an increased preference for nutritious and low-calorie products. The continued success of our business depends on providing consumers with the beverages they want, and innovative product development has become a driving force within the Coca-Cola system.

In 2005, a process was established whereby the Coca-Cola Enterprises (CCE) Executive Committee reviews risks on a monthly basis. From this group, executive sponsors were identified for each of the top six risk categories. These executive sponsors are responsible for reporting on their respective area to the relevant board committee or the full Board of Directors as needed. Last year, we also appointed an external agency to review our governance structure and identify ways for us to continue refining and enhancing our risk management approach.

At an operational level, each CCE facility has a comprehensive risk assessment in place along with a mitigation program. We work closely with The Coca-Cola Company to maintain a joint Incident Management and Crisis Resolution process. CCE also has an Immediate Action Team in North America and an identical process in Europe to address and resolve situations that occur, and designed to minimize negative impacts on employees, consumers, customers, assets and business operations.

Managing Corporate
Responsibility and Sustainability

In 2005, CCE established a Corporate Responsibility and Sustainability Advisory Council, comprising functional management from North America and Europe. The functions represented include: Environmental Affairs, Human Resources, Investor Relations, Legal, Marketing, Public Affairs and Communications, Quality Assurance, Sales, Supply Chain and Tax. This cross-functional advisory council guides and manages corporate responsibility strategy. Prior to this, our social and environmental performance was managed by individual functional areas.

This council is led by Chairman Lowry Kline, and chaired by John H. Downs, Jr., Senior Vice President of Public Affairs and Communications. The council met twice in 2005, reporting to the CCE Executive Committee and the Public Issues Review Committee of the Board of Directors. Council members engage directly with their counterparts at The Coca-Cola Company and participate in the Core Sustainability Team and the Coca-Cola Environment Council, which are charged with leadership on issues of corporate responsibility and sustainability for the Coca-Cola system. Locally, corporate responsibility is managed by the functional managers within each business unit or country.

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