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  • Risk management is imperative for current business operations, which are undergoing continuous change, to create confidence that ThaiBev can attain both short term and long term objectives and goals. Meanwhile, risk management can reduce losses and damages to an acceptable level, or even create business opportunities for ThaiBev to increase its competitiveness and growth.
  • Therefore, ThaiBev has determined a systematic framework and approach for the management of any risk that might occur throughout the organization. Understanding has been created with management and every employee about opportunities and risks which may arise. There have also been plans formulated to mitigate risk with systems of monitoring, and evaluation of risk management to discover emerging risks in the future.
  • Besides risks that may occur during normal operations, ThaiBev analyzes risks which might impact ThaiBev’s sustainability, and has found the following four significant changes in economic, social and environmental aspects:
    • Changes in demographic structure and the onset of an aging society.
    • Changes in climate.
    • Changes in technology causing changes in business formats.
    • Threats to the security and safety of information systems.
All of these are considered Emerging Risks which may hinder the business in reaching its goals and lead to losing business opportunities, as well as compromising the organization’s reputation, stability or sustainability.
Structure of Oversight and Risk Management
Divided into the corporate level and the product group or business unit level:

At the corporate level:
There is a Sustainability and Risk Management Committee1 (SRMC) which comprises ThaiBev directors and senior executives from each product group or business unit appointed by the Board of Directors. They are tasked with determining policies to manage sustainability and risk management, and strategically supervise the business in sustainable development effectively and efficiently. They are required to specify operational frameworks for ThaiBev’s risk management, including monitoring, screening, and giving ideas or suggestions in regards to the matters of concern.

At the product group or business unit level:
Senior executives of each product group or business unit are tasked with controlling and monitoring risk management at their product groups or business units and reporting to the SRMC.

There are also risk coordinators of each product group or business unit who assist in supervising and monitoring risk management operations in their product groups or business units, including coordinating with the Corporate Risk Management Working Team.

In addition to the management of risks which may arise in normal operations in each product group or business unit, ThaiBev also manages risk associated with strategic planning, investment, and setting business plans which have been considered by the relevant committees, such as the Raw Material Procurement Committee, the Management Committee, the Investment Committee, or the Executive Committee. Corporate risk must be reported to the Company’s Board of Directors and the Audit Committee, to be confident that every risk is managed according to the specified measures.
1Note On November 23 2017, the Company’s Board of Directors Meeting No. 5/2017 approved the renaming of the “Risk Management Committee” to the “Sustainability and Risk Management Committee” and extending the scope of its responsibilities to cover the oversight of strategies to bring about efficient and effective sustainable development.
Risk Management Process
ThaiBev’s risk management process is Integrated Risk Management, divided into two different kinds: Top-down and Bottom-up Enterprise Risk Management. For instance, senior management has a role in identifying and evaluating ThaiBev’s strategic risk by analyzing the relevant internal and external factors, and considering a risk management plan alongside business plans, yearly operational plans and investment plans, with the continuous follow-up of risk management.

At the operational level, the head of a department and its staff must identify and evaluate operational risks, develop a risk management plan, implement it and report the results continuously at every level, from department and subsidiary company to product group or business unit, and at the corporate level.

Integrated Risk Management comprises the following procedures:
  • 1. Define objectives of ThaiBev and the product groups or business units to be consistent.
  • 2. Identify risks faced by ThaiBev or the business units, or those which are latent in operations, which may arise and have a negative impact on ThaiBev or the business achieving its goals.
  • 3. Analyze and assess risks to find their cause; categorize and prioritize existing risks by evaluating the chances of a risk incident, and the impact or level of severity of the damage that might occur.
  • 4. Plan risk management actions.
  • 5. Implement the action plan.
  • 6. Follow up, report and evaluate risk management by comparing Key Risk Indicators, specified as criteria to evaluate the results of operations for middle management upwards.
Culture of Risk Management
To engender knowledge and understanding and to instill risk management into the awareness of every employee, and develop it to be part of corporate culture in order to help ThaiBev to grow sustainably, the following measures have been taken:
  • Held special trainings in risk management for the risk coordinators of each product group or business unit, as well as training activities for employees and orientation sessions for new employees. These are to understand ThaiBev’s risk factors, the processes of risk management, and the management tools used to address risk consistently in both general and particular cases. This is to prepare our employees for any incident which may occur in the course of operations, whether short term, medium term, or long term.
  • Encouraged and supported employees to discuss or communicate matters of risk or safety at ThaiBev, including proposing opinions about managing risk in meetings and at training sessions.
  • Established internal agencies such as the Office of Legal Affairs, the Compliance Unit of the Office of Corporate Secretariat, the Corporate Risk Management Working Team, and the Office of Internal Audit to examine and monitor operations, and give advice and suggestions on improving operations for product groups, business units and other departments across the organization.
  • Initiated the Ways of Work Awards (WOW Awards) project for employees to present projects which may be a concept or method of operations which supports the ThaiBev’s sustainable development. Employees may enter the WOW Awards competition, which is judged by senior management. They choose work that is interesting and will benefit ThaiBev when implemented in real life contexts.
Besides this, employees can report potential risks to ThaiBev in writing to their line managers, or they can report to the Office of the President and CEO using the dedicated email account, after which the President and CEO will consider and take further actions deemed appropriate.
Moving Forward to Cope with Emerging Risks
1. Risks from changes in demographic structure and the onset of an aging society, which include:
  • The increase of the older population in many countries including Thailand, which is bringing about a society of the elderly, in which the proportions of working age people and children are reduced.
  • Changes in consumer behavior featuring a greater interest in health.
  • Consumers are consuming a wide range of goods and services with an expectation of improved quality and higher standards.
  • The government sector prioritizes promoting health among the elderly to reduce the burdens of care, and provides health services to the elderly, including through the amendment of various relevant regulations concerning goods and services in order to impact consumers’ health and safety.
Potential business impact
  • Opportunities to create innovative healthy food and beverage products or new businesses related to this trend.
  • ThaiBev cannot change or adapt to consumer behavior or needs in time.
  • If competitors take an opportunity before ThaiBev, this represents a lost opportunity or capability to compete and/or become the market leader.
  • If ThaiBev cannot operate within new mandatory regulations concerning goods and services which have an impact on consumer health and safety, this may affect ThaiBev’s reputation if punishment and fines are imposed.
  • ThaiBev lacks labor and cannot take on new workers as projected as the working age population decreases.
Risk management measures
  • Research and development of healthy food and beverage products according to the ThaiBev’s health and nutrition policy, catering to the needs of each consumer group or age category.
  • Development and investment in the food business in the form of a range of restaurants which can reach many customer groups to grow the business as a whole, and support the beverage business.
  • Designing and developing labelling and packaging which communicates nutritional information and values of ThaiBev’s food and beverage products.
  • Communicating or giving information about products through IT systems, which is consistent with consumers’ behavior and lifestyles, and which reaches the target group of consumers.
  • Continuous monitoring of amendments to regulations which are relevant to goods and services, as well as consumers’ rights, to specify as criteria in manufacturing goods and providing services, with communication to ensure understanding with every agency concerned.
  • Developing systems bringing IT into operations, to reduce labor requirements.
2. Risks from climate change, including:
  • More severe and frequent natural disasters, whether drought or floods.
  • Movements to conserve the environment in various forms.
  • Increasing measures by government agencies to care for the environment, or regulate the use of natural resources by issuing new laws or strengthening existing laws.
Potential business impact
  • The problems of water quality and insufficient water from natural sources impacting the large volume of water supply required in the production process.
  • Uncertainty and changes in volumes and prices of agricultural products, which are raw materials essential to manufacturing ThaiBev’s products, which have impacts on supply chain management, whether production, sales or transportation of products.
  • Business continuity after severe and sudden natural disasters.
  • New environmental laws which may impact ThaiBev’s future production costs.
  • Damage to ThaiBev’s reputation and financial losses from fines if it is found to be involved in impacting the environment and ecosystems.
Risk management measures
  • Every business unit must strictly follow ThaiBev’s environmental and corporate water management policies. For instance, by implementing the ISO 14001 environmental management system, adopting the principle of the 3Rs (Reduce, Reuse, Recycle), keeping adequate water in reserve for production, managing and reducing the use of water in production, joining the Water Footprint and Carbon Footprint projects at the corporate level and product level, using modern technology to save energy in the treatment of factory effluent, and using energy arising from the waste water treatment process to be an alternative energy source for factories, etc.
  • Using modern, energy-saving production technology and machinery to save on resources and energy and reduce greenhouse gas emissions, which will help to reduce production costs and increase production efficiency and effectiveness.
  • Applying the concept of the Circular Economy in reusing waste from the production process in the agricultural and industrial sectors, to reduce impacts on the environment.
  • Promoting the development and design of environmentally-friendly packaging to reduce production costs, increase the effectiveness and efficiency of production, transportation processes and build a good image for the product brands.
  • Managing according to the suppliers’ code of practices for the environment and sustainable development.
  • Continuous analysis of changes in prices and volumes of key raw materials as a method to manage ThaiBev’s Consolidated Strategic Sourcing and Procurement. This is to cope with shortages and volatility of raw material prices which are affected by climate change, as well as promoting suppliers’ efficient use of energy in logistics (GHG Emission Scope 3).
3. Risks from changes in technology causing changes in business formats, including:
  • Rapid development of digital technology impacting the market and products in various industries, including food and beverages.
  • Many companies, and competitors in particular, have changed business formats to deal with change and create competitive advantages by reaching new groups of customers by offering new products and services which use technologies.
Potential business impact
  • ThaiBev cannot adapt to changing technological trends in time, or if competitors can create business opportunities first, can impact revenue growth, market share, brand value and brand loyalty, etc.
  • Opportunities to develop innovative new products and businesses related to the trend of technological change.
Risk management measures
  • Developing an IT Master Plan to sustainably cope with and manage digital technologies.
  • Studying and developing work systems applying IT to operations to increase the efficiency and effectiveness of operations, as well as improving ThaiBev Group’s competitiveness, such as IT systems under the supply chain cycle.
4. Risks to the security and safety of information systems, including:
Threats of cyber security attacks, which are frequent in many companies or agencies and have severe impacts.
Potential business impact
  • Leakage of important information about business operations such as business plans, sales information, operating results, and the data of customers and business partners, causing damage to brand reputation and image, and financial impacts from losing customers and business partners.
  • ThaiBev IT systems are not available for business operations, causing operational delays, losses of efficiency and effectiveness, and inability to attain specified goals.
Risk management measures
  • Overseeing, identifying and addressing cyber security threats and suspicious internal activities relating to computers.
  • Developing plans to create digital literacy and accessibility to systems and information concerned with operations among staff of every level.
  • Creating cyber security awareness among staff by regularly holding training sessions or teaching about management and safety protection of data.
  • Testing disaster recovery plans and setting response and rehabilitation measures in the cyber security risk management plan.