Product quality / safety risk A faulty product or one that is not compliant with regulations or is non-performing could expose Givaudan to consumer health issues, customer complaints, warranty claims, returns and re-runs, product liability claims or litigation and lead to loss of revenues, market share and business reputation. Legal and compliance risks Should our employees, especially key individuals within the organisation (Board members, Executive Committee members, senior management) display or tolerate behaviour that is illegal or unethical, or should our contractual arrangements be inadequate, this could lead to reputational as well as financial damage to Givaudan. How we mitigate risks • We systematically evaluate all ingredients for both human and environmental safety prior to their inclusion in our raw material palette • Our global IT systems control product formulations in order to ensure that raw materials are used as intended when products are manufactured in our production facilities • We regularly assess Givaudan’s legal and compliance risks at local and global levels and take actions to mitigate these risks in collaboration with the different compliance functions. How we turn risks into opportunities • We have rigorous product safety and quality programmes • We support, and in many cases lead, industry-wide programmes of the respective industry associations. As a company with 79 production sites worldwide, we are subject to a number of operational risks. Operations A breakdown of our operations may threaten our ability to produce and deliver quality products/services at competitive prices on a timely basis. Such breakdown may be caused by internal or external factors, including a pandemic (such as COVID-19) or the consequences of climate change or water stress. Disruption of supply chains / suppliers A disruption in the supply of the raw materials we require for our production or volatility of raw material prices may negatively impact our ability to produce at competitive prices and in a timely manner. Such disruption may be caused by external factors such as a pandemic (COVID-19, for example), climate change or a breakdown at one or more of our suppliers. Environment, Health & Safety and operational risk management If Givaudan should operate in a way that is harmful to the environment and/or causes community nuisance (odour emissions, waste water), this could result in fines, reputational impact or even the loss of the Company’s licence to operate. Information technology risk In a fast moving digital world, information and communication technologies are critical for Givaudan to address new consumer behaviours and to collaborate with its customers to give them the best experience. However, digitalisation also creates new threats and cyber attacks have become more prevalent the world over. How we mitigate risks • We have instituted a number of processes including structural architectural measures, behavioural measures and business continuity planning • We monitor and manage supply chain risks arising from raw materials • Our Environment, Health and Safety (EHS) function regularly carries out comprehensive risk assessments at our production and major commercial sites • The EHS team is involved from the beginning of projects to support the design of all new building activities • We continually monitor cyber security risks. How we turn risks into opportunities • We implement a cross-functional risk management process that is integrated with global supply chain management thus enabling us to mitigate raw materials sourcing risks • We developed visual risk portfolios to show mitigation measures and progress on improvement actions. • We successfully installed a number of new technologies for environmental protection in the area of odour emissions control. Operational risks Legal, Compliance and Regulatory risks • We use green chemistry and techniques such as biocatalysis to make products high in purity and yield • We work on ‘side-stream valuation’ enabling us to use a larger part of the existing raw material • We carry out risk assessments to develop water mitigation action plans, including efficiency improvements and water reuse opportunities. Givaudan – 2021 Integrated Annual Report Strategic value creation Tr ends, risks and opportunities 31 Strategic value creation