5.2.1.3 Price Risk The Group is exposed to equity price risk arising from equity investments held classified at fair value through income statement. The Group manages its price risk through a diversification of portfolios within the limits approved by the Board of Directors. The Group holds its own shares to meet future expected obligations under the various share- based payment schemes. Sensitivity analysis The Group’s equity portfolio is composed of US and EUR shares. The benchmark for the reasonable change is an average of historical volatility of US indexes (16% for the last three years) and of CAC PME index (25% for the last three years). The sensitivity analysis has been determined based on the exposure to equity price risks at the end of the reporting period: 2021 in millions of Swiss francs Equity price increase Equity price decrease Impact on income statement 57 (57) 2020 – 16% USD & 24% EUR in millions of Swiss francs Equity price increase Equity price decrease Impact on income statement 32 (32) 5.2.2 Credit Risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group. Commercial credit risk is managed by the Group’s subsidiaries and monitored on a Group basis whilst counterparty risk related to financial institutions is centrally managed within the Group Treasury function. Trade receivables are subject to a policy of active risk management which focuses on the assessment of country risk, credit limits, ongoing credit evaluation and account monitoring procedures. Generally, there is no significant concentration of trade receivables or commercial counterparty credit risk, due to the large number of customers that the Group deals with and their wide geographical spread with the exception of one single external customer that generates revenues, mainly attributable to the Fragrance & Beauty Division, of approximately CHF 526 million (2020: CHF 566 million). Countries, credit limits and exposures are continuously monitored. The credit risk on liquid funds, derivatives and other monetary financial assets is limited because the counterparties are financial institutions with investment grade ratings. The following table presents the credit risk exposure to individual financial institutions: 2021 2020 Tot al in Mio CHF Max. with any individual bank in Mio CHF Number of banks Tot al in Mio CHF Max. with any individual bank in Mio CHF Number of banks AAA − range 3 2 1 30 30 1 AA − range 3 2 4 16 14 4 A − range 99 68 15 104 50 12 BBB − range 136 97 5 275 155 7 The carrying amount of financial assets recognised in the consolidated financial statements, which is net of impairment losses, represents the Group’s maximum exposure to credit risk. 5.2.3 Liquidity Risk The Group manages liquidity risk by maintaining sufficient cash, marketable securities, availability of funds through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, Group Treasury maintains flexibility in funding by maintaining availability under committed and uncommitted credit lines. Group Treasury monitors and manages cash at the Group level and defines the maximum cash level at subsidiary level. Cash surpluses held by subsidiaries over and above amounts required for working capital management are transferred to the central treasury centre. The surplus of cash is generally invested in interest bearing current accounts, time deposits, money market deposits and funds. When necessary, intercompany loans are granted by the Group to subsidiaries to meet their non-recurrent payment obligations. The following table analyses the Group’s remaining contractual maturity for financial liabilities and derivative financial instruments. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group is obliged to pay. 65 Givaudan — 2021 Governance, Compensation and Financial Report Governance Report Compensation Report Consolidated Financial Report Statutory Financial Report Appendix Notes to the consolidated financial statements