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Sustainability

Home / 2017 Sustainability Report / Creating and Sharing the Value of Growth for a Sustainable Future
RISK MANAGEMENT
ThaiBev emphasizes creating and sharing the value of stable and sustainable business growth for the organization’s stakeholders. Accordingly, proper risk management is essential to business operations that face uncertainty and continual change, and enables the Company to accomplish its objectives and goals. It reduces losses, increases competitiveness and/or creates new business opportunities for the organization. The key elements of a risk management framework are as follows:


Risk Management Structure
The risk management structure of the Company is divided into two levels: the corporate level and the product group or business unit level.

At the corporate level there is the Risk Management Committee (RMC)*, which comprises appointed directors and senior management from each product group or business unit, and is responsible for determining the Company’s risk management policy and framework, monitoring, reviewing and providing comments and recommendations.

At the product group or business unit level there are senior executives of each product group or business unit to control and track risk management as well as reporting to the RMC.

In addition to managing potential risks arising from normal operations of each product group or business unit, the Company also manages risks associated with strategic planning, investment and business planning. Corporate risks shall be reported to the Board of Directors and the Audit Committee to ensure that all risks are managed in accordance with the determined measures.


Risk Management Process
Risk management at the product group or business unit level consists of the following steps:

  • Identify risks – identify risks that the Company faces or are latent in the operations which could occur and adversely affect the achievement of Company objectives

  • Analyze and assess risks – analyze the causes, likelihood of occurrence and the possible impact or severity of identified risks in order to classify and prioritize the existing risks

  • Plan action – plan and determine the risk management actions

  • Implement – implement the risk management action plans

  • Monitor, control and measure – track risk management progress and assess its results by comparing with key risk management indicators defined as a criteria for performance evaluation of middle management up





*Remark : Following the end of the year ended 30 September 2017, the Board of Directors Meeting No. 5/2017 dated 23 November 2017 approved the transformation of the existing “RMC” to “Sustainability and Risk Management Committee (“SRMC”)” and the revised scope of responsibilities to ensure that the Company can generate an overview of effective and efficient sustainability strategies.



Risk Culture Within the Organization
To develop an understanding and instill risk management awareness as a part of corporate culture amongst all employees, ThaiBev regularly organizes training workshops for existing and new employees to understand the organization’s risk factors, processes of risk management and tools for managing risks, both generally and specifically. By doing so, employees will be prepared to cope with potential events affecting business operations in the short, medium and long term.

Employees can report potential risks to the organization in writing to their superiors or to the Office of the President and CEO through the dedicated email account, after which the President and CEO will consider and take further actions deemed appropriate.



Therefore the Company has come up with the following approaches to the management of emerging risks for all product groups, so as to reduce loss or adverse effects that might occur, while at the same time enhance the competitiveness of ThaiBev Group.


Potential Risks to The Sustainability of ThaiBev Group

  • Demographic changes - population aging, growth of the middle class and urbanization

  • Climate change

  • Technological changes and increasing dependence on technologies, especially the internet

  • Shift in global economic power from the United States and Europe to Asia



  • Such changes could engender many kinds of risk, including risks to the economy, to corporate governance, to the environment, to safety and security, to health and to society. Together these are known as “Emerging Risks”, which present obstacles that may affect the attainment of business goals, the Company’s reputation and the stability and sustainability of the organization.


Demographic Changes
Risks and Impacts
  • Consumer behavior becoming increasingly health-conscious constitutes a risk if the Company cannot adapt to consumer behavior and/or demands.

  • Demands for increasingly diverse, high-quality, high-standard, or innovative goods and services among middle-income and high-income consumers, which include consumers in large cities. If the Company cannot respond promptly, it will miss and lose opportunities, competitiveness and/or market leadership.

  • Increasingly strict laws and regulations concerning consumer goods or goods which affect the health of consumers leading to legal compliance risk. If the Company is found to be non-compliant or only partially compliant, it could affect the Company’s reputation, or result in punishment and penalties.

Management

  • Research and develop healthy food and beverages in accordance with ThaiBev’s health and nutrition policy.

  • Develop and invest in the food business in the form of diverse restaurants that can appeal to different groups of customer, so as to expand the business overall and support the beverage business.

  • Implement a “Central Kitchen” for managing the food business, from purchasing and using raw materials, to managing and reducing the quantity of food waste.

  • Prioritize the distribution channels of Hotels, Restaurants and Cafes (HORECA), which are consistent with the behavior of middle-income and high-income consumers.

  • Design and develop labels and packaging that communicate nutritional value and information about the Company’s food and beverages.


  • Provide product information through communications technology to reach target consumers in ways that correspond to their behavior and lifestyles.

  • Train and educate employees in various departments involved in business development and expansion both domestically and internationally on trends and significant changes in the economy, society and environment.


Climate Change
Risks and Impacts
  • Environmental degradation, e.g., deforestation, water and air pollution.

  • Severe weather events and failure to alleviate or adapt to the adverse effects of climate change.

  • Water, food and energy crises, which will impact the Company’s supply chain, from procurement, to production, shipping and sales.

  • Uncertainty and change in the quantities available and price of agricultural goods may impact upon, the Company’s raw materials.

  • The various forms of environmental conservation movement and the increasing strictness of environmental regulations.

  • Financial losses due to fines and loss of reputation if the organization negatively impacts the environment and ecosystems.
Management
  • Every business group must strictly comply with the organization’s environmental and water management policies, e.g., implementing the ISO 14001 environmental management system, adopting the 3Rs (Reduce, Reuse, Recycle), reserving sufficient water for production, taking part in the Water Footprint and the Carbon Footprint projects at the corporate and product levels, using modern and energy saving equipment in the treatment and removal of factory wastewater. Furthermore, various renewable energy projects have been developed as an alternative source of energy for manufacturing.

  • Use of modern, energy saving production technology and machinery to reduce greenhouse gas emissions and the use of natural resources and energy. Together this helps reduce costs or input in the production process, and increases production efficiency and effectiveness.

  • Support the development of environmentally friendly packaging in order to reduce costs or input and increase effectiveness and efficiency during production and shipping, as well as improving the image of the brand.

  • Manage in accordance with the Suppliers’ code of practices on environmental and sustainable development.

  • Continuous analysis and tracking of changes in price and available quantities of raw materials, in order to improve management and performance across the value chain.

  • Develop the consolidated strategic sourcing and procurement system across the ThaiBev Group network.


Technological Changes and Increasing Dependence on Technologies, Especially the Internet
Risks and Impacts
  • Cyber security attacks, which affect the security of information and the availability of information systems.

  • Leaks of sensitive data pertaining to business operations, such as business plans, sales information, business performance, customer and business partner information, all of which could harm the organization’s reputation.

  • Non-compliance with relevant laws, such as the Computer Crime Act.


Risks and Impacts
  • Develop an information system for use in supply chain management, especially for managing procurement, transportation and distribution channels all the way to end consumers.

  • Monitor, identify and resolve cyber threats and suspicious internal computer activities.

  • Train and educate employees on information security management and protection.

  • Practice disaster recovery plans and set response and rehabilitation measures in the cyber security risk management plan.


Technological Changes and Increasing Dependence on Technologies, Especially the Internet
Risks and Impacts
  • Cyber security attacks, which affect the security of information and the availability of information systems.

  • Leaks of sensitive data pertaining to business operations, such as business plans, sales information, business performance, customer and business partner information, all of which could harm the organization’s reputation.

  • Non-compliance with relevant laws, such as the Computer Crime Act.
Management
  • Develop an information system for use in supply chain management, especially for managing procurement, transportation and distribution channels all the way to end consumers.

  • Monitor, identify and resolve cyber threats and suspicious internal computer activities.

  • Train and educate employees on information security management and protection.

  • Practice disaster recovery plans and set response and rehabilitation measures in the cyber security risk management plan.


Shift in Global Economic Power From the United States and Europe to Asia
Risks and Impacts
  • An unfavorable business environment and stiff competition in many forms, both domestically and abroad due to diff erences in language, religion, social values, tradition and culture.

  • Obstacles to overseas business expansion caused by foreign trade barriers.

  • Financial losses due to the fluctuation of exchange and interest rates and changes in business liquidity.
Management
  • Expand the sale of alcoholic and non-alcoholic beverages into other Southeast Asian countries.

  • Continuously and closely track financial market trends and changes in interest and exchange rates. Use various financial instruments to manage the costs stemming from interest and exchange rates.

  • Maintain or increase the Company’s credit rating with institutions inside and outside of Thailand.

  • Ensure the alignment of the business strategies of all product groups (spirits, beer, non-alcoholic beverages, and food), and support communication and collaboration of all business units under ThaiBev Group.

Our Mission
Creating and Sharing the Value of Growth for a Sustainable Future



GRI 102-11, GRI 102-15, GRI 102-16, GRI 102-17, GRI 103-1, GRI-103-2, GRI 201-2, GRI 204-1, GRI 205-2, GRI 205-3, GRI 305-5, GRI 308-1, GRI 401-1, GRI 403-2, GRI 404-1, GRI 414-2, GRI 419-1, GRI 416-1, GRI 417-1, GRI 417-3, GRI 443-3