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FINANCIAL RISKS AND ITS MITIGATION

THE HERSHEY COMPANY


• An american company and it is one of the largest chocolate manufacturer in the
world.
• It also manufactures other products such as cookies, cakes, milkshakes, drinks
and many more.

• Headquarter: Hershey Pennsylvania, which is also the home of Hershey Park and
Hershey’s Chocolate World.

• It was founded by Milton S. Hershey in 1894 as The Hershey Chocolate Company, a


subsidiary of his Lancaster Caramel Company

• It is engaged in manufacturing, selling and distributing various package types of sugar


confectionery products, pantry items and gum mint refreshment products under more than
80 brand names.

• Available across the United states and in over 60 countries worldwide

• Member of World Cocoa Foundation


RISKS EXPERIENCED
1. Reputational Risks
• High Competetiton – one of the major threats for the company is that there is very high
competition in the chocolate segment.
• Health Awareness – more and more people are becoming aware of a healthy lifestyle after
many blogs and news started focusing on these.
• Raw Material Problems – cocoa is a major raw material used in Hershey’s, there is a huge
consumption of cocoa across the world in various forms.
• Issues and concerns related to the quality and safety of our products, ingredients or
packaging could cause a product recall and/or result in harm to the company’s reputation.
• Market Demand for new and existing products could decline.

2. Commodity Risks
• Decreasing Margins - costs of all products is increasing. Distribution costs, labor cost,
fuel costs, everything is rising.
• Increase in raw materials and energy costs.
3. Operating Risks
• Disruption to our manufacturing operations or supply chain could impair our
ability to produce or deliver finished products, resulting in a negative impact on
our operating results.

4. Market Risks
• Many Small Players - the segment is such that there are many and small regional
players thereby cutting the market shares in different regions.

5. IT Risks
• Disruptions, failures or security breaches of our information technology
infrastructure could have a negative impact in our operations.
1. Reputational Risks by:
• Making reputational risks part of strategy and planning, control
process.
• Understanding all actions can affect public perception and
stakeholders' expectations.
• Focusing on a positive image and communication.
• Creating response and contigency plans.

2. Commodity risks by :
• Managing and making sure that equipments work properly.
• Keep strong business to business relationships
• Having adequate insurance
• Knowing the regulations
3. OPERATIONAL RISKS BY:
• Having strategies and plans in place
for managing disruptive events,
including their global supply chain
strategies and their principle-based
global relations strategy.

4. MARKET RISKS BY:


• Developing appropriate policies,
process and organizational structures.
5. INFORMATION TECHNOLOGY RISK
BY:
• Continuous monitoring and updating of our
information technology and networks
• Investing in industry standard security
technology

• Though they have been subject to cyber


attacks and security breaches, thoses events
did not have a significant impact on Hershey's
operation.