SCG places great emphasis on the Enterprise Risk Management, which is a key process contributing to the attainment of the organization’s objectives and goals, and ultimately leading to value added for the organization, shareholders, and other stakeholders, as well as contribute to SCG’s sustainable growth.

     To identify and evaluate potential risks in the organization, SCG has categorized the risks into eight categories and established the risk appetite to create common language for everyone in the organization. SCG manages the risk appetite by placing emphasis on safety, health and environment risk; compliance risk; and reputation risk. As these risks can have significant impact on SCG’s business performance as well as reputation, it is important that they be prevented. However, SCG can accept some types of risks based on a risk-return trade off and the risk limit has been established in terms of monetary value.

     SCG risk management process focuses on both downside impact and business opportunity of a risk event and the incorporation of risk management as part of working processes, leading ultimately to a risk culture.

• Risk / Opportunity identification-SCG encourages forward-looking approach in risk and opportunity identification by using tools such as key risk indicators (KRIs).
• Risk assessment-SCG established common risk metrics to standardize assessment methodology across the organization. Risk owners use various tools (e.g. risk map, scenario analysis, correlation analysis, and benchmarking), and also identify critical process for crisis management to assess the likelihood and impact of risk to prioritize which risk needs to manage actively or require to monitor the circumstance closely.
• Risk response-If the risk owners find  that a residual risk remains higher than the
  
  
  
  designated risk limit, countermeasures must be clearly stated or emergency response and business continuity plans must be developed in case of a crisis. For emerging opportunities, business plans must be developed to capture such opportunities on a timely basis.
• Reporting and monitoring-The risk management results are reported to the Business Unit Risk Management Committee, SCG Risk Management Committee and The Audit Committee, respectively

     In 2014, there were significant risks, namely, political instability in Thailand, uncertainty in domestic and global economic recovery, and falling of global crude oil prices. SCG adopted its risk management process when dealing with these external risks. For example, SCG managed the situation of Thailand’s political unrest, which could have disrupted SCG’s business operations and supply chains through the Business Continuity Management (BCM) system. The BCM office was responsible for conducting drills on emergency response and business continuity plans, closely monitoring the situation and promptly alerting relevant parties. On another example, SCG turned Thailand’s economic slowdown caused by political situation into an opportunity for growing its export revenues, leveraging our long-established export distribution channels. As for the event of falling crude oil prices, SCG Chemicals took up an opportunity from falling prices of Naphtha, its main raw materials, to manage its production costs.

     In 2015, SCG will continue to dedicate efforts on improving the quality of its risk management by creating awareness on the importance of risk management on all fronts and equipping employees with knowledge and capability to enable them to better manage their risks. Furthermore, integrating and sharing of risk and risk management data will support a more efficient Enterprise Risk Management.