Non-financial risks, which were not among the main risks identified in the review, are qualified as secondary risks. They are presented in section 5.1.4 “Non-financial risk analysis” based on the Group’s risk mapping methodology. These secondary non-financial risks were assessed as non-material in terms of their short-term financial impact and the control over these risks by the departments concerned. They include physical risks related to climate change and risks related to talent attraction and retention.


4.1.1 Financial risks

The main financial risks to which the Group is exposed are as follows:

  • currency risk, described in section below;
  • tax risk, described in section below;
  • commodity risk, described in section below;
  • customer counterparty risk, described in section below;
  • financial institution counterparty risk, described in section below.

Detailed quantified information about the Group’s exposure to these risks, after hedging, is presented in Note 6.6 to the consolidated financial statements, page 277.

The Group’s financial risk management policy is designed to meet the following core objectives (listed in order of priority): financial security of transactions, liquidity of assets and sources of financing, and profitability (interest income and expense). The aim is to minimize the impact of market risks on the Group’s results and, to a lesser extent, on the balance sheet. Interest rate and currency risks are managed at the Group level by the Treasury & Financing Department, which reports to the Executive Vice-President, Finance.

Interest rate and currency instruments are used to support the Group’s investment and financing policies, as well as its hedging strategies (fair value and cash flow hedges). Group Treasury & Financing has the necessary expertise and computer applications (Front to Back treasury management software) to invest available cash, raise funds and hedge risks on the financial markets in accordance with the practices generally applied by leading groups. The department’s organization and procedures are reviewed by the Internal Audit Department. Monthly cash reports are submitted to the Executive Vice-President, Finance, who validates the objectives set in accordance with previously approved management strategies.

Amid rising inflation, governments and businesses alike are seeking to protect employees’ purchasing power. This makes it more likely that the face value of our products will be indexed to inflation, helping to preserve our business model. Currency risk


The Group is exposed to currency risks on the translation into euros in the consolidated financial statements of business volumes, revenue, EBIT and balance sheet items for each country outside the euro zone. Due to the Group’s operations in 46 different countries, many financial statement indicators are inevitably exposed to foreign currency translation risk, particularly that arising from the translation of financial statements denominated in Brazilian reals and Mexican pesos. A significant proportion of the Group’s business is generated in countries where the functional currency is different from the Group’s reporting currency (the euro).

However, the Group is only exposed to limited currency risk, because each subsidiary’s revenues and expenses are generated and paid in local currency.

Actual cash flows between countries whose currency is not the euro consist mainly of dividends and royalties paid by subsidiaries to their parent company, and interest payments made and received on intercompany financing. These cash flows may be exposed to changes in exchange rates between the original currency and the euro.

Exchange gains and losses recognized in the 2021 income statement are presented in Note 6.1 “Net financial expense” to the consolidated financial statements, page 268.

The impact of a 10% change in the exchange rates of the main currencies is presented in Note 6.6 to the consolidated financial statements, paragraphs “Foreign exchange risk: currency analysis”, “Currency hedges” and “Sensitivity to exchange rates”, page 179.


Measures to manage the risk

Group policy consists of investing the cash generated by an activity in the currency of the country that manages said activity. This avoids having to manage the liquidity risk associated with currency fluctuations and reduces currency risk exposure.

This foreign currency translation risk is not hedged.

However, concerning currency risks on capital flows between subsidiaries and the parent company, foreign currency loans/borrowings are translated using the standards generally applied by leading groups. Other capital flows are included in the monthly cash reports presented in the preliminary comment in section 4.1.1.