Risk
Management

Because of its activities, Multiplus is exposed to some financial, operational and commercial risks. To mitigate them, the company employs a series of risk management policies, systems and actions.

Financial risks

The Financial Risk Management Policy determines coverage limits and a list of allowable financial instruments, in addition to establishing rules related to eligibility and concentration by counterparty.

Exchange rate risk: resulting from point sale contracts pegged to the US dollar, which account for around 85% of Multiplus revenues. In 2012, protection against this risk was done through exchange rate hedging instruments.

Credit risk: comes from cash and cash equivalents, financial instruments, bank deposits and credit exposure to clients, including active accounts receivable. It is managed based on the Financial Investments Policy, which determines maximum concentrations by counterparty and credit risk rating.

Liquidity risk: the Multiplus operation has positive cash generation, minimizing its liquidity risk. The company invests its surplus cash in exclusive investment funds and bank securities, pursuant to the Financial Investment Policy, with allocation limits by investment type and terms.

Operational risks

Technology risk: to minimize exposure to risks caused by obsolete technology, Multiplus adopts the latest technologies in its IT infrastructure and systems, in addition to investing in renewal and updating of IT, hardware, software, processes and personnel.

Fraud risk: to reduce the risk of fraud, the company adopts a robust policy of employee and partner responsibilities and access rights, applying segregation of responsibilities, audit trails and cross-checking of information in its business processes and systems.

Process risk: Multiplus adopts rigorous control of change management, with technological integration environments and certification of systems and production, which are separated and replicated among each other. It also relies on strict testing and acceptance processes for systems and documentation.

Commercial risks

Breakage rate: appropriate management of the rate of expired and non-redeemed points is crucial to the business. If the rate is very high, it hurts the network's attractiveness, if it is very low, it cuts into the business's profitability. Multiplus has an area that monitors and maintains the breakage rate at an interval that is considered to be ideal for the sustainability of the business.

Competition: the loyalty programs and networks market in Brazil is still in development, which is why new players could represent a threat while at the same time having a positive effect on the market and raising the interest of members. The main instrument for protection is the use of exclusivity clauses with strategic partners.