To ensure business operates throughout volatile, unpredictable, complex, rapidly changing and unpredictable environments as currently observed, the Company emphasizes efficient risk management. This measure has been achieved through developing operational guidelines which refer to international standards and business operations integration throughout the supply chain in addition to continuous promotion of risk management culture for employees at all levels.
The Company's risk management process consists of 4 main steps as follows:
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Establish the context
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Risk & opportunity identification
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Risk assessment
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Risk treatment, monitor and report
Diagram illustrating the risk management process.
Establish the context through analyzing global conditions at the macro level, business level and industry level, inclusive of self-assessment, to determine current conditions and future trends.
Risk and opportunity identification which may impact the achievement of Company objectives and strategies encompassing both external and internal factors is realized through implementing methods and techniques to elicit potential risk issues. This may include reviews of risks in the Company from reliable external sources, analysis of various organizational questionnaires or risk assessment forms, risk analysis from simulated scenarios, etc.
Risk evaluate and prioritize through utilizing assessment criteria consistent with acceptable risk levels.
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The Company determines the organizational level of acceptable risk (Risk appetite) for financial matters and various other aspects inclusive of investment returns, business operations which considers society and the environment, regulation compliance, occupational safety, quality product manufacturing, and standards.
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Criteria utilized in Risk Assessment are established based on acceptable organizational risk levels which emphasizes risks in terms of impact, likelihood, and risk heat map.
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Material risk prioritization considers the relationship between risk impact and the likelihood. Risks beyond acceptable levels are considered significant risks and warrant main cause identification.
Define risk management, monitoring, and reporting measures Risk owners must consider additional management approaches for critical risks as a means for risk reduction to acceptable levels prior to operational progress reporting in accordance to specified cycles.
Within the previous year, the Company has focused on monitoring business conditions through terms of market growth for plant-based proteins and animal cell-based proteins, and the trend toward a low-carbon society. The mentioned observed trends constitute potential new risks which have been assessed, as depicted in the risk chart, while the corresponding risk management guidelines have been simultaneously implemented.
Diagram illustrating a risk chart
Risks associated to the low-carbon society shift
With climate change and global temperatures continuously rising, greenhouse gas emissions reduction remains a critical global agenda requiring collaboration among all countries. Thailand has demonstrated intentions for greenhouse gas emissions reduction in addition to raising the Nationally Determined Contribution (NDC) target at the 26th United Nations Framework Convention on Climate Change (COP26) Conference of Parties. The Company's critical suppliers have issued various measures which continue to address relevant issues comprising measures to adjust carbon prices prior to entering EU and US borders, implementing import policy which ensures products free from deforestation or biodiversity risks to Europe, etc. The mentioned measures are considered initiatives to address partial trade barriers. During the 27th session (COP27), each country delivered a national greenhouse gas reduction roadmap, which may result in additional measures and thus a decrease in sales, profits and market share. However, this may also serve as a good alternative for consumers if the Company's supply chain can maintain operations under new confines.
Risk Management
The Company aims to become a low carbon organization through focusing on operations according to circular economy principles as follows:
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Increase manufacturing process efficiency through reducing energy consumption per production unit and determining both short-term and long-term goals.
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Promote utilization of renewable energy in various forms, comprising of initiatives to install biogas to clean energy generation in farming facilities and follis fuels reduction through switching to renewable energy.
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Develop products which mitigate climate change impact comprising low carbon products, reduced plastic packaging, and recyclable products.
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Strategize logistics for maximum fuel efficiency and reduce unutilized space within logistics vehicles.
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Reduce waste, food loss and food waste within the manufacturing process to limit waste volume destined for landfills and incinerators.
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Resolve challenges through nature conscious measures throughout responsible raw materials sourcing and supply chain initiatives, increase green areas within operating sites, conserve, protect and restore watershed providing forests and mangroves.
Risks associated to sourcing protein from plants and animal cells
Consumers trends indicate a potential reduction in meat consumption due to more conscious consumption awareness, desire for businesses to operate responsibility amidst climate change and animal welfare concerns. Therefore, consumers expect food businesses to manufacture products which are delicious and healthy while being environmentally friendly and sustainable. It is estimated that the global plant-based protein market may account for 750 billion Baht in 2024 with a steady 10% growth per annum from 2019. The market has observed new players and constantly changing technologies thereby enabling exponential expansion. The mentioned development affects meat protein category sales, which is the Company's core business. Although the Company currently produces meat alternative proteins, further studies, research, and development is required to gain expertise in this new business category.
Risk Management
The Company aims to develop and offer a wide range of protein-based products to satisfy trends and consumer demands to ensure continuous growth as follows:
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Establishment research and development centers for food products in addition to collaboration with relevant experts in alternative protein product research with focus on commercialization.
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Research consumer behavioral trends, consumer needs analysis, consumer needs oriented product development inclusive of vegan options, flexible vegetarian options, etc.
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Constant improvements of plant-based protein product taste, texture and variety.
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Current analysis of trends and opportunities for commercialization of cells-based animal protein.
Additional risk factors are described in the Risk Management section
Performance