Risk and Crisis Management
The Company places importance on risk and crisis management, effectively managing risks while considering the balance among risks, rewards, and the mutual benefits of stakeholders. This approach increases the opportunity to achieve the organization's goals and create sustainable added value. Additionally, it reduces potential causes of damage, including minimizing the level and size of the damage. Furthermore, it enhances the Company's ability to deal with emergency situations that may happen and effectively adapt to current and future challenges.
In 2023, the Company focused on managing "ESG Risk," which is the risk related to Environmental, Social, and Governance issues, especially managing risks caused by climate change. At present, the impacts of climate change and global warming are becoming more severe. As a result, the Company has disclosed regulatory information regarding risks, opportunities, and impacts that happen or may happen related to climate change affecting the Company’s business operations, financial strategy, and planning. The guidelines of the Task Force on Climate-Related Financial Disclosures (TCFD) have been utilized as a framework for overseeing climate change operations. Climate change risk management is considered one of the key goals of the organization and is also part of environmental risk management
Administrative and Managerial Operations
The Company conducts risk management and reviews risks by considering the changing environment factors along with business operations on the basis of sustainable development in economic, social, and environmental dimensions. The Company has established a risk management policy as follows:
- Establish processes, guidelines, and measures for risk management that are internationally appropriate and adequate, including identification, analysis, assessment, prioritization, management, control, monitoring, reporting, evaluation, and ongoing and consistent information about risks, and practices throughout the Company.
- Measure the risks in terms of quality, such as reputation, image of the Company and quantitative, such as loss results, decrease in income, cost increase by considering the potential opportunities and impacts.
- Set a risk limit for the damage that may occur to be within the level that the Company can accept and specify events or risk levels that are warning signs for operators to take certain actions in order not to exceed the specified risk limit.
- Have written operating regulations for executives and practitioners practice which is a risk control from operations.
- A risk management culture has been fostered throughout the organization, aiming to enhance understanding, awareness, and shared responsibility concerning risk management, control, and its impacts. Operations between all risk owners and Risk Management Department are interconnected to monitor, review, and evaluate significant risks that may arise. Additionally, an annual risk management report is prepared and proposed to the Risk Management Committee. This includes training initiatives to systematically disseminate knowledge about risk and risk management across all personnel levels, including directors, senior executives, and employees, through the course “Risk Management in the Organization” at least twice a year.
In 2023, the Company participated in the Climate Change Management Prototype Project of the Stock Exchange of Thailand (SET) from June to November. This involved directors, senior executives, and employees of both the Company and TPI Polene Public Company Limited, totaling 28 individuals. The training sessions, conducted both online and on-site with SET, took place on 9 June, 4 August, 20 October, and 16 November 2023, respectively.
Risk Management Process
The Company has a risk management process under its policy and has additionally embraced the principles of the Committee of Sponsoring Organizations of the Treadway Commission - Enterprise Risk Management (COSO-ERM) as a framework of business operation guidelines to ensure that its business operations are in line with sustainable development goals. The COSO-ERM criteria encompass 8 elements:
Follow-up and Review
In 2023, the Company reviewed significant risk issues by classifying them into 7 types as follows:
|
Type of Risk |
Risk Control Measures |
Overall Risk Assessment Results |
|
Strategic Risk is the risk that arises from the inability to operate the business according to established plans, in compliance with internal and external factors. |
(1) Risk management of using waste fuel to replace coal for reducing production costs involves managing the quantity and cost of waste procurement, including factors such as the moisture properties of the garbage, etc. (2) Investments in environmentally friendly projects. (3) Investments in projects and businesses with high growth potential in the future necessitate a feasibility study and analysis of key factors' sensitivity before investing, as well as monitoring investment progress to mitigate the risks of potentially lower-than-targeted investment returns, delays in project implementation compared to the planned schedule, and exceeding the set budget, among other risks. (4) Finding appropriate funding sources for project expansion.
|
Medium |
|
Operational Risk is the risk rekated to operations caused by internal operating processes or external factors that impact revenue and operating costs. |
The Company has controlled risks from internal or external factors that affect business operations to a level acceptable to the organization, such as (1) Cost control and ensuring that the procurement of raw materials is both sufficient and within the allocated budget. (2) Procuring sufficient key inputs for production to prevent business interruption Control of document operations, recording information in the system correctly and efficiently |
Medium
|
|
Financial Risk is the risk arising from a lack of liquidity or available funds for conducting business or investing in various projects. |
(1) Carefully implementing financial policies within the specified budget to ensure appropriate remuneration and sufficient cash flow for effective business operations. (2) Monitoring and managing financial risks, such as risks from exchange rate fluctuations, interest rate. Managing liquidity or funding sources to ensure they are sufficient for business operations, such as providing a revolving line of credit, long-term loans, and issuing bonds, in response to the changing trends in the exchange rate market, money market, and capital market. |
Medium |
|
Compliance Risk is the risk caused by the inability to adhere to relevant rules and regulations, which may be inappropriate or outdated, thus impeding operations and potentially leading to legal repercussions. |
(1) The Company has established a unit to control the compliance with regulations and policies of the government sector. (2) Supervising and controlling the operations to be consistent with the regulations of the Office of the Securities and Exchange Commission and the Stock Exchange of Thailand |
Medium |
|
Environment Risk is the risk arising from pollutant emissions during the production process, leading to adverse impacts on the environment. |
(1) The Company implements a Net Zero Greenhouse Gas Emission policy, ensuring that the production process does not generate dust, chemical residues, or wastewater that could adversely affect the community's environment.
(2) The Company has prioritized managing climate change risks, with its main goal being to replace coal with 100% waste fuel in the production process by 2024 and achieve carbon neutrality by 2037. |
Medium |
|
Social Risk is the risk of human resource management, safety, occupational health and working environment, including violations of human rights, etc. |
(1) The Company has a policy to enhance employees' knowledge, understanding, and skills, providing appropriate remuneration and respecting human rights through fair benefits and equality. (2) Preparing a safety operating manual according to industry standards, as well as establishing a complaint channel and a Welfare Committee to oversee employee safety and occupational health. |
Medium |
|
Governance Risk is the risk associated with managing transparency in operations and addressing corruption. |
The Company has a policy to oversee the operations of each department in accordance with the principles of corporate governance, the organization's Code of Conduct, and ethics, strictly aiming to prevent corruption. |
Medium |
Note: Risk scores are divided into 4 levels as follows:
|
Overall Risk Level |
Score |
Definition |
|
Low |
1-2 |
Acceptable level: No need to control risks or additional management |
|
Moderate |
3-6 |
Acceptable level: It must be controlled to prevent the risk from turning to unacceptable levels. |
|
High |
7-12 |
Unacceptable level: It needs to manage the risk to remain at an acceptable level. |
|
Very High |
13-25 |
Unacceptable level: It needs to be urgently managed to reach an acceptable level immediately. |
Emerging Risk
The Company has identified emerging risks expected to arise in 2024, along with corresponding measures for managing them, as follows:
(1) Risk arising from sudden changes in consumer demand due to environmental and climate conservation trends
Nowadays, society is increasingly concerned about the environment and climate change which is growing more severe both nationally and internationally. Across the globe, there is widespread support for banning plastic bags and promoting the use of recycled materials to mitigate environmental impact. Consequently, consumer behavior has shifted, prompting entrepreneurs to prioritize environmental considerations and meet stakeholder expectations regarding sustainable environmental management. This has led the Company to adjust its business operations to ensure sustainability.
The Company emphasizes the importance of shifted consumer behavior in response to society's increasing focus on environmental concerns. To achieve this, the Company has enhanced efficiency in every production process, aiming to reduce resource and energy consumption. This includes adopting innovative technologies, such as installing solar rooftop systems in factories, and prioritizing zero-waste production processes.
(2) Risk arising from rapid change and the use of advanced technology
Currently, technology, including digital technology, is developing rapidly and continuously, affecting changes in marketing, product development, business models, business opportunities and challenges. The exponential growth of automated machinery, artificial intelligence technology, and robot technology enhances the efficiency of business operations. However, it also poses challenges for infrastructure and personnel development to keep pace with technological advancements. Rapid analysis of Big Data may also create risks related to human rights and ethics.
TPI Polene Group is aware of the changes in advanced technology; therefore, it has elevated its innovation efforts, including the adoption of new technology to modernize and develop factories into Smart Plants, enhancing competitiveness by focusing on business operations and responding to stakeholders. Additionally, the Company has also prioritized cyber threat management and enhanced personnel knowledge to align with new technology.
(3) Risk arising from adapting to natural disaster crises
Natural disasters resulting from climate change, such as floods and droughts, are increasingly becoming more severe. If the Company fails to adapt adequately to address these challenges, it may suffer serious damage.
The Company Group is aware of the potential for natural disaster crises and has prepared to address such situations by practicing emergency plans aimed at ensuring business continuity across various scenarios. Through these practices, executives and related employees acknowledge their roles, responsibilities, and any shortcomings that may arise during operations. This preparation allows for the implementation of various backup measures to address these issues proactively, mitigating the impact before a real disaster occurs.
For details on risk management, please refer to the Company’s Form 56-1 One Report 2023, specifically the section titled “Risk Management”
Crisis Management
The Company has a Business Continuity Plan (BCP) to address significant risks and public health risks that may arise, ensuring the smooth operation of the Company's business. Guidelines and plans for potential risk management are established, covering various areas as follows:
- Identification of significant risks including fire, storm, flood, terrorism, riot, protest, and cyber threats
- Important activities/work of departments
- Events, situations or problems that may arise due to significant risks
- Impacts occurred
- Activities and problem-solving methods
- Supporting plan and troubleshooting steps
- Responsible person and coordinator
The central working group and related departments will jointly monitor, review and evaluate the BCP plan on an annual basis.