Risk Management
At Indorama Ventures we adopt an Enterprise Risk Management (ERM) framework which is aligned with the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and the International Organization for Standards’ ISO 31000 Risk Management.
Our effective risk management oversight structure is crucial in supporting risk management in our business Segments, and through the framework we embed sustainability and business resilience.
This forms the basis for decision-making about which risks are priorities, what the appropriate response should be, and how resources should be allocated to manage the risk or opportunity in a way that best supports Indorama Ventures’ strategy.
Risk Governance Structure
The ERM framework drives our risk management process in providing updates to the Indorama Management Council, Sustainability and Risk Management Committee and Board. Cycles include reporting on both our Top Corporate Risks and our Business Risks and result in our annual risk management report.
At the core of our risk management process are risk committees and risk owners accountable for endorsing risk controls and action plans, providing effective risk understanding, authority and demarcation of accountabilities in risk management.
Risk Management
To ensure that Indorama Ventures remains resilient and responsive to challenges and opportunities, risk management is embedded as a mechanism for monitoring and managing uncertainty. It influences new opportunities for continuous and sustainable growth and to adapt strategies in a rapidly changing world.
We assess the potential impact and likelihood of risks associated with sustainable development and profitable growth. This includes internal and external risks, including global risks and associated factors that may affect the company’s operations due to increasing business and our international operations.
Where necessary, identified risks are allocated to a Risk Owner and analyzed, recorded, reported, and monitored through our risk management process. Appropriate control measures are monitored for their performance to ensure changes to risks are identified and their control activities are continuously updated and improved.
Across Indorama ventures we conduct a sensitivity analysis every six months to ensure sustainability, especially the environmental and social impacts to business operations. A water sensitivity analysis is conducted to identify water stress locations at all our operations globally. Any risks pertaining to human rights at our workplaces, and in supply chain are also part of our risk management.
At the corporate level, we conduct a sensitivity analysis every six months to ensure sustainability, especially the environmental and social impacts to business operations. The water sensitivity analysis is conducted to identify water stress locations at all our operations globally. The risks pertaining to the human rights risks at our work places, in supply chain are also part of the risk management.
Plant Crisis Management
We have introduced a Crisis Management playbook for use across Indorama Ventures which provides the common operating approach to crisis management and allows flexibility to respond to a range of incidents. These include incidents that are managed solely at a site using local resources, as well as incidents that draw on the full resources of Indorama Ventures.
We are now better prepared to respond to and recover from any disasters according to the Testing & Exercising (T&E) program for the Global Business Services (GBS) Business Continuity Plan (BCP), which effectively minimizes the impact on our operations while still serving our customers' expectations. Following this exercise, we determined areas for improvement that will help us be more prepared in the future. The 2023 T&E for GBS was completed in September 2023.
Business Continuity Management (BCM)
Business Continuity Management programs are implemented where appropriate to ensure continuity in the delivery of our products and services at predefined capacity during a disruption. Effective business continuity management ensures the company can provide a minimum acceptable operation in the event of a disaster, and helps to preserve our people, asset, reputation, and profitability.
As global supply chain disruptions continue to pose challenges to business operations, Indorama Ventures has proactively strengthened its supply chain resilience by completing critical supply chain BCPs for two key regions: the Thailand PET Supply Chain and Americas Ethylene Oxide Supply Chain. This safeguards against potential disruptions and ensures the uninterrupted flow of materials and products to our operations. By systematically assessing risks and vulnerabilities within these two supply chains, we can strategically implement mitigation measures to boost our resilience. These measures include implementing robust communication protocols with suppliers and partners, integrating operational procedures to ensure business continuity, and fine-tuning our scale-up approach.
Indorama Ventures has strengthened its supply chain resilience to reduce the risk of supply chain disruptions by concluding critical supply chain BCPs for the regions listed below:
AMER Region:
- Americas Ethylene Oxide Supply Chain
- North America and Mexico iPET Supply Chain
EMEA Region:
- Europe iPET product BCP
Asia Region:
- Thailand PET Supply Chain
Risk Culture
We support our employees and develop strategies and communications to produce positive cultural outcomes. This is continually refined to reflect ongoing changes in our business strategy.
We encourage a positive risk culture at our corporate office and in all our operations which helps to:
- Strengthen effective risk management.
- Promote sound risk-taking.
- Address immediate behavioral and other relevant issues ensuring a safer and healthier environment for our workforce.
- Ensure that emerging risks and excessive risk-taking, including M&A activities are assessed, escalated and addressed.
Communication and education are meaningful actions in developing risk awareness. We encourage open and upward communications, sharing knowledge and best practices, continuous process improvements, and a strong commitment to ethical and responsible business behavior.
We also foster an environment that both recognizes and rewards people for paying attention to risk, both positive and negative, to reward the right kind of behavior. Employee Suggestions, Incentives, and Near-miss Reporting are just some of our programs that regularly promote a positive risk culture.
Risk Assessment and Mitigation
We conduct a comprehensive bi-annual review of critical risk areas based on defined performance indicators. This process involves a detailed examination of the causes and consequences associated with risks and evaluating the effectiveness of existing risk control plans. In addition to the current controls in place, we proactively develop supplementary plans to further reduce risk to a level deemed as low as reasonably possible.
| Key Risk Areas and Control Plans | ||
|---|---|---|
| EHS | EHS incidents may result from non-compliance to process safety, occupational safety, and environmental management procedures |
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| Cybersecurity | Inability to effectively manage cybersecurity risks may impact our business, reputation, and value proposition. |
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| Regulatory and Corporate Compliance | Adverse regulatory changes could lead to higher costs of compliance and impact our value proposition. |
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| Growth Strategy | Delayed achievement of business objectives due to ineffective execution of growth strategies, such as mechanical recycling |
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| Value Chain | Profitability may be affected across the business value chain due to adverse market conditions and supply chain disruptions. |
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Risk Capability & Culture Leadership Program
We developed and implemented a carefully curated Risk Capability & Culture Leadership Program covering top 80 global leaders across the organization to enhance risk capability and elevate risk thinking to drive agility in addressing the ever changing business environment. This program combines both experiential learning and tools to strengthen risk leadership mindset in leaders to shape the masses and envision future state of risk.
Risk Capability
Upskilling on the overall landscape of Risk Management, Crisis and Business Continuity Management emphasizing tools and effectiveness imparting value through best practices and lessons learnt.
Credible Risk Champion
Shape leaders’ risk management aptitude, confidence, drive and conviction for risk through experiential knowledge transfer and facilitated activities.
Risk Conversation
Dedicated open discussion on risk management to surface timely key risk/ achieve risk target involving leaders and related parties through rigorous facilitated deliberation & challenge.
VALUE
Foundational Risk Management capability building for Leaders by providing tools/ methodologies to support decisionmaking & business objectives.
VALUE
Creates Risk platform to reflect & react where Risk becomes the Top of Mind, leaders as Risk model and champion to constituent.
VALUE
Elevating Leaders as credible risk advocates by strengthening confidence, drive and conviction on risk management to shape masses’ risk culture and practices.
Cybersecurity
We have intensified our commitment to IT security and cybersecurity, reinforcing our systems and processes to effectively address these evolving threats. The rising prevalence of digital technologies and information technology (IT) has allowed Indorama Ventures to achieve operational and commercial excellence. However, the surge in digitalization and global connectivity has also heightened the risk of cyber threats and data breaches, impacting our business operations, continuity, and reputation.
The Sustainability Risk and Management Committee (SRMC) and Audit Committee maintain oversight of Indorama Ventures’ cybersecurity resilience, actively monitoring our cybersecurity framework and developing robust policies and procedures that align with our risk appetite. Cybersecurity governance is overseen by our Board member in providing the direction and suggestions on the development and implementation of our cybersecurity strategy in compliance with industry standards, addressing the risks associated with our IT security and cybersecurity to safeguard and ensure the resilience and security of our digital systems.
We continuously apply physical and network security measures, incident response planning, employee training, and system enhancements as part of our efforts, while complying with relevant laws such as the Personal Data Protection Act and updating our IT security policy.
