The company considers effective risk management and mitigation to be integral to our business operations. We encourage employees to have a positive attitude to risk and to understand the risks that are inherent in our business. As well as having the right tools and processes, effective risk taking requires the right culture and behaviors across our businesses. Our risk management culture and processes meet world-class standards. In 2018, Thai Union Group achieved the highest score in the Risk and Crisis Management category with an industry best-in-class 100th percentile ranking by the Dow Jones Sustainability Index.
RISK MANAGEMENT CULTURE
The company continues to embed risk culture through all levels of the business. Starting from the company’s leadership, the Board of Directors (BoD) promotes and enforces that consistent and effective risk management becomes part of the organizational culture. The policy, framework, guidelines and structure on risk management demonstrate formal communication. Risk management is embedded in our business decisions, especially in our strategic investments. One concrete action that can be seen is the risk management policy approved by the BoD in 2018 that strategic investments are required by the risk assessment and mitigation plan to be reviewed by the Risk Management Committee (RMC) prior to the investment.
Moreover, the company demonstrates risk management related to sustainability, for example, Human Rights Risk Management. For additional information, see www.thaiunion.com/en/download/sustainability
In addition to our leadership, employees are encouraged to have a positive attitude towards proper risk management from their first day with the company. This is consistently reinforced throughout their time with the organization, such as through the new joiner program, risk management training, activities and internal news updates. They are also motivated towards proper risk management through incentives, for example, the company’s recognition program and performance evaluation.
RISK MANAGEMENT FRAMEWORK
The company’s risk management framework is in accordance with the international standards of COSO ERM and ISO 31000: Risk Management. It is a guideline for management and employees to operate consistently. The framework is designed to identify, assess, manage, monitor and communicate systematically and consistently in order to minimize their probability and potential impact to company business.
Thai Union Group processes risk management with a two-way approach. A top-down risk assessment workshop is performed once a year by the Global Leadership Team to assess corporate risks, entities’ common risks and global emerging risks at the Group level. Then, materiality risks will be defined to group risk owners to manage, monitor and report the risk status to RMC and Board of Directors every quarter. A bottom-up risk assessment occurs in parallel at subsidiary level. Materiality risks will be managed by subsidiary-level risk owners. However, if the risk level is high and could impact at a Group level, or if Group-level intervention is required, the responsibility for mitigating actions will generally be determined by the Group-level executive. This promotes risk culture at all levels but also provides a channel to raise business risks to the Group level.
Risk appetite is an important factor to consider when Thai Union Group sets strategies and determines the direction of risk management. It is set with regard to financial and reputation impact together with risk likelihood. Risks are defined in four risk levels: High, Medium-High, Medium-Low, and Low. High and Medium-High are considered to exceed the risk appetite and require the immediate development of additional mitigation plans.
KEY RISK INDICATORS (KRIS)
For materiality risks, Key Risk Indicators, or KRIs, are set up and closely monitor the movement. KRIs provide an early signal of increasing risk exposures in various areas of the enterprise, and can be lagging and leading indicators. For example, the company uses a number of negative news stories related to labor practices as a KRI for one of the non-tariff trade barrier risks.
RISK MANAGEMENT ORGANIZATION
Risk management structure, roles and responsibilities are clearly established. BoD has overall responsibility to ensure risk management is appropriately and effectively implemented. RMC oversees risk management implementation, holds regular meetings and regularly reports the company’s significant risks, mitigations and improvements to the BoD. The Group Risk Management Department coordinates and implements the risk management processes at Group level while providing advice and guidance about the risk management framework and process to subsidiaries. Risk coordinators at subsidiary level coordinate and implement risk management processes according to guidance. Management and employees are responsible for managing risks in their areas of responsibility.
The company also established the Group Treasury Committee to oversee financial risk management. In addition, the Group’s policies covering foreign exchange risk, interest rate risk, commodity price risk, credit risk, liquidity risk, capital management and good governance practices are available for operational references. The framework parameters and the acceptable risks are used as the key communication and control tools for management and the Treasury team globally.
In addition, the Audit Committee (AC) oversees and monitors risk management by means of independent reviews, in order to ensure that risk management is implemented according to the policy and effectively throughout the organization. For additional information on roles and responsibilities, see the Corporate Governance Report on pages 97 to 135.
Thai Union Group is a global seafood processing company and its operating and financial results are subject to a variety of risks inherent in the seafood industry. The company can prepare for many of the risks to mitigate any impact and/or minimize likelihood, however many of them are not within our control and could materially impact the company’s operations, financial position or reputation.
On the risk radar below and on the following pages, we have identified the major risks to our business. Some of the risks from 2017 have not fundamentally changed and so remain listed, while new threats identified during the global risk workshop have been added. We have updated the risk event and management and mitigation.
Learn more about our risk factors here
Thai Union Group not only focus on the materiality risks, but also pay attention to emerging risks although they are still immateriality. As a result of analysis and assessment, the Company may be exposed to emerging risks of cyber threat and geopolitical political risk. Learn more about our emerging risks here.