IBERSOL | Annual Report 2021

CORPORATE GOVERNANCE REPORT 52. Existence of other functional areas regarding competences in risk control. There are Central Functions - Quality, Human Resources, Planning and Management Control and Financial Units – that reporting to the Execu- tive Committee, promote, coordinate and facilitate the development of risk management processes. 53. Main Risks to which the Company and its Affiliates are exposed. The Board of Directors considers that the Group is exposed to the nor- mal risks arising from its activity, namely at the level of the restaurants. Strategic and operational risks The corporate reality of the Ibersol Group is, due the nature of its activity, highly volatile, permanently exposed to challenges, transformations and changes, which impose an accelerated management rhythm. The year 2021, with the propagation of new waves and the emergence of new variants of Covid-19, was an atypical and highly conditioned year. Ibersol’s business, like any retail business, is exposed to the instability of the economic environment as well as the evolution of consumer prefer- ences. Strategic risk management involves the monitoring of macroeco- nomic indicators, studies of consumer trends, studies of the catering market with consumer surveys and monitoring of competition activity in the different markets where the Group operates. In the annual Planning process, all these factors are reassessed and mac- roeconomic trends are analysed. Internationalization of businesses, strict control of costs, launching of new concepts, distribution channels, prod- ucts and promotions adapted to changes in consumer profiles are some of the initiatives aimed at mitigating this risk. With the acquisition of the Eatout Group, Ibersol has a significant part of its turnover in airport concession areas. The concessions are awarded by tender for a certain period of time, so the Group may or may not guar- antee the renewal of these contracts, which may affect its turnover and profitability. Operating various international brands under the franchise system, the Group enters into long-term franchise agreements (20 years or 10 + 10 years) and, after the respective term, have been renewed, although there is no such requirement. The Group seeks to fulfil all obligations associ- ated with contracts and maintain a good relationship with franchisors as a way to minimize the risk of non-renewal. 268