The company considers effective risk management 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. This was demonstrated in 2017 when Thai Union Group was listed to the Dow Jones Sustainability Index (DJSI) for Emerging Markets for the fourth year in a row and, under the topic of Risk and Crisis Management, scored a record breaking 98 out of 100 points.
The company demonstrates the desire 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, with no compromise even if it presents higher costs or more operational challenges. The concrete actions can be seen in our sustainability commitment, Business Ethics and Labor Code of Conduct, and internal control effectiveness. In addition to 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.
The company’s risk management framework is established in accordance with the international standards of COSO ERM (Enterprise Risk Management – Integrated Framework, the Committee of Sponsoring Organizations of the Treadway Commission) 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 by self-assessment, plus a dual approach. A top-down self -assessment workshop is performed at Group level once a year, plus monitoring and reporting the risk status to the management, Risk Management Committee and Board of Directors every quarter. For all material risks, the company will identify Group risk owners who have in-depth knowledge and the business experience to monitor the risks, identify mitigation controls, report the status of the risks and mitigation plans to management and the Risk Management Committee. A bottom-up self-assessment occurs in parallel at every level at our subsidiaries. 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.
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 structure, roles and responsibilities are clearly established. The Board of Directors (BoD) has overall responsibility to ensure risk management is appropriately and effectively implemented. The Risk Management Committee 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 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
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. The table below summarizes the major risk factors in 2017, which are similar to 2016. The symbols represent management’s assessment of how these risks are expected to develop compared with the previous year.
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.