High risks 2014 ECONOMIC SLOWDOWN Description Possible impact Mitigation Mitigation Possible impact Description IMPLEMENTATION OF BSP1 IMPACT AND SPEED OF LARGE GROUP PROJECTS Description  Possible impact Mitigation 34 Management review RISK MANAGEMENT Carlsberg Group Annual Report 2013 The Carlsberg Group’s Executive  Committee has identified three  high risks facing the Group in  2014. These risks were assessed  to be placed in the upper-right  quartile of the risk heat map. The economic slowdown of recent years  continues, particularly in Western Europe.  But slower growth is also evident in Eastern  Europe and some Asian countries. Slower economic growth particularly impacts  emerging markets, including Eastern Europe,  where there is a clear correlation between  GDP growth and growth in beer consump- tion. However, in the mature markets of  Western Europe the challenging macroecon- omy has also had a negative impact on beer  consumption. Declining or slower growth in  beer consumption may negatively impact  the Group’s net revenue and operating profit. We continuously monitor the macroeconomic  health of our markets and will continue to  take actions to reduce the impact of the ad- verse economic environment. Mitigating fac- tors and actions include our broad portfolio of  beer, which caters to different price segments,  and the active diversification of our portfolio  outside beer, for example the Somersby cider  brand. From a cost perspective, we apply a  systematic and focused approach to allocate  our resources to fewer things with the highest  impact. The many efficiency initiatives across  the business will also reduce the cost base. In order to reduce the risk of not being able  to manage the BSP1 implementation and the  business transformation, a number of activi- ties are ongoing, including: post go-live assessment of ways of working to identify  issues and create solutions; accumulating and  adapting to lessons learned from past roll- outs; securing key resources across the mar- kets; and, when and if appropriate, reorganising  the BSP1 teams to ensure clear responsibilities  at all times during the roll-out period. To ensure the development and implementa- tion of the large Group projects, they are the  focus of attention for top management. In  addition, the Group has adopted a rigid and  systematic approach to closely monitor and  track the status of key initiatives, includ- ing progress versus plan, issues, risks and  savings. Where relevant, KPIs are linked to  project performance. In light of the challenging economic environ- ment in many of the Group’s markets, the  structural, efficiency and integration projects  represent important levers for growing Group  operating profit. Failure to successfully  implement the projects therefore represents  a risk to achieving the Group’s financial  ambitions. Rolling out the BSP1 project requires signifi- cant resources and entails substantial imple- mentation costs. If the implementation of  the project or the adoption of the new oper- ating model fails, this could have a negative  impact on regional and Group earnings. 2013 was the first year of the three-year  implementation period of the supply chain  integration and business standardisation  project (BSP1). The project is a key enabler  for the transformation of the operating  model in Western Europe and will lead to  increased speed, optimised asset utilisa- tion and improved capabilities. The project  will yield significant long-term benefits in  Western Europe. In addition to the BSP1 project, the Carlsberg  Group is running a number of large structural  and efficiency projects to reduce the overall  cost base of the Group. Another large project  in 2014 will be the integration of the newly  acquired Chongqing Brewery.