Risk management
Risk management is essential for achieving and executing our strategic goals and objectives. Within Royal A-ware, risk management is a continuous process that is integrated in our day-to-day business. The goal is to identify and mitigate risks that could affect the achievement of our goals and objectives. As part of this process, risks are identified, analysed and evaluated. The company sets its risk appetite per type of risk, and based on this decision, mitigating measures and controls are implemented. Both the residual risk and the effectiveness of the taken measures are monitored.
The Management Board is responsible for effectively controlling the risks. On a day-to-day business, this is the responsibility of the management of the business units and division management, and staff departments; this is the first line of defence. Management is supported by several supporting departments, each focusing on a dedicated topic, and a dedicated risk department. These departments are functioning as a second line of defence. Analysing and monitoring risks and their controls is both done on a strategic level as on an operational & financial level. The effectiveness of the most important key-controls is tested four times a year and the outcomes are reported to the Management Board.
In 2025, efforts were made to further professionalise the Risk Management department as part of Finance & Accounting, which focuses on the aforementioned aspects of our risk management. Special attention has been given to the renewed double materiality assessment (DMA) for European Sustainability Reporting Standards (ESRS) reporting and the updated tax strategy.
Being a food producing and processing company, quality, product, and process knowledge are key values for Royal A-ware. By managing processes and systems per high standards, we believe that food safety can be guaranteed. This is reflected, among others, in the quality certifications awarded to us as dairy company, such as BRC, IFS, and FSSC 22000.
One of the most important external factors impacting Royal A-ware is the availability of milk as a raw material for our products, now and in the future. The EU nature restoration regulation and the nitrogen emissions discussions in both the Netherlands and Belgium could impact how much milk is available for production. To minimise the impact, the company is actively supporting the dairy farmers to reduce their emissions and is an active participant in discussions with the Dutch government and sector organisations. Royal A-ware is also expanding its production activities to other regions, most recently in Ireland and Spain.
As an international company, we are dependent on European and local laws and regulations. If European or local laws and regulations change, it could impact the company’s competitive position.
The primary financial instruments of Royal A-ware, other than derivatives, are used to finance Royal A-ware’s operational activities or directly arise from these activities. Additionally, Royal A-ware enters into derivative transactions, primarily interest rate swaps, to hedge the interest rate risk arising from Royal A-ware’s operational and financing activities. Royal A-ware’s policy is not to engage in trading financial instruments.
The main risks arising from Royal A-ware’s financial instruments are credit risk, liquidity risk, cash flow risk, and price risk, which includes interest rate risk and to a limited level FX risk. These risks are mitigated through the use of interest rate swaps, a group policy regarding the acceptance of new customers, and strict cash collection procedures.
Royal A-ware’s results are dependent on developments in milk and cheese prices, over which we have limited influence. By establishing long-term relationships with suppliers and customers, Royal A-ware seeks to strengthen its position. The volatility in raw material prices is reduced by contracting milk suppliers with whom a monthly fixed ‘A-ware’ milk price has been agreed. In addition, we invest in long‑term collaboration with customers to manage risks and create more efficient and sustainable supply chains.
Cyber risk is considered an important risk with the potential for significant impact on the organisation if the risk materialises. The company mitigates such risks by training employees, securing IT systems, and implementing proper and complete backup and recovery procedures. The organisation periodically assesses the level of risk and takes appropriate actions accordingly.
Several factors could impact the ability for Royal A-ware to produce and deliver its products to clients. This could be caused by a power outage, a fire, a cyber-attack or another operation related incident. The company analysed these risks per business unit and for the company as a whole. In response Royal A-ware has implemented measures, plans and controls to minimise the chance that the risk materializes. And if it does, that the impact is limited as much as possible and the safety of our staff and products is guaranteed. The company certified this business continuity management system via ISO 22301:2019.
Climate change and the response to it, could also impact the profitability of the organisation. Please refer to the chapter Greenhouse gases of the sustainability statement of this report for a detailed analysis on both the risks, and how Royal A-ware manages these. In 2026, we plan to investigate formalising our risk management practices in relation to sustainability reporting.
