SCG has implemented its Enterprise Risk Management Framework in alignment with international standards. The framework consists of the followings: 

1. Strategy Establishment 
   SCG has established explicit objectives and risk appetite in managing risks to ensure consistent risk management practice across the organization. 
2. SCG Risk Management Structure and Responsibilities  The organizational structure of SCG’s risk management is illustrated below: 

3. Risk Management Policy 
SCG has implemented risk management framework in alignment with international standards and integrated it into the corporate business operations. This allows SCG to identify risks or business opportunities in an appropriate and timely manner, and to reduce the risks to an acceptable level or identify opportunities to add value to the organization in an attempt to achieve the established goals, meet the expectations of stakeholders, promote sustainable business operation, and comply with the good corporate governance principles. 

4. Risk Management Process 
The SCG risk management framework covers three key areas: Strategic risk, Investment risk, and Operational risks. The risk management process comprises identifying risks or opportunities, risk assessment, risk response, and risk reporting.

Additionally, SCG has established a Business Continuity Management Governance Structure to prepare for potential crises that may disrupt the company’s operations. Companies under SCG are required to analyze their business activities and resources to assess the impact of possible disruptions. SCG establishes a business continuity management system by analyzing its resources and business activities, assessing risks, preparing plans such as a risk management plan, a crisis management manual, an emergency response plan, and business continuity plan. SCG also stipulates that executives at all levels and involved employees must practice, maintain, and revise the plans and manuals constantly so they can be implemented effectively during crises.

Furthermore, SCG makes use of analytic tools such as Sensitivity Analysis, Stress Testing and Scenario Planning to assess the extent to which various factors could potentially affect the financial performance of its businesses. The evaluation is not limited to financial risks, but also included non-financial risks. SCG conducts the sensitivity analysis, for example, on changes in foreign exchange risk, key energy and raw materials price risks in its normal operation, and investment returns in the investment projects. For non-financial risks, SCG employs the stress testing and scenario planning to monitor the availability of water from the major reservoirs nearby the plants such as in Rayong Province. By leveraging the ENSO forecast model and an in-house model to analyze precipitation and estimate water inflow patterns in different scenario, the company can formulate mitigation plans and choose the appropriate actions for each scenario in a timely manner.

5. Building a Corporate Risk Culture 
SCG is committed to building a strong risk culture organization-wide. SCG has, therefore, assigned top executives to communicate the significance of risk management and be role models in risk management. They are also entrusted with establishing practical guidelines on effective risk management practices and integrating them with decision-making process. Apart from that, related trainings and seminars are also provided to management and employees throughout the organization. SCG also places the importance of business management in line with an integrated GRC approach through various communication efforts. 
 

SCG Risk Appetite Statement

“To grow its business in a profitable,
sustainable manner,

SCG will proactively manage its risks.

In doing so, SCG does not tolerate risk that endangers the health & safety of its employees, business partners, customers or the communities in which it operates; violates SCG’s environmental or compliance standards; OR that harms SCG’s reputation.

SCG will also knowingly take on risks
with financial impact in line with
prevailing corporate guidelines
(note that these may change over time).”

Key Risks, Business Opportunities, and Risk Management Strategies

In 2024, SCG conducted a risk assessment aligned with sustainability development issues, covering environmental, social, and good corporate governance risks.

SCG evaluated business impacts through the SCG Risk Universe, which categorizes risks into 8 types:

• Environmental and social risks

• Governance and Compliance risks

• Reputation and intellectual property risks

• Hazard risks

• Input risks

• Process risks

• Financial risks

• Business risks

Key Material Risks

are major factors affecting SCG’s sustainability changes in both the short and long term. SCG adheres to the principle of regenerative transformation and strives to create positive impacts on the environment, society, and economy without leaving anyone behind, strengthen interorganizational collaboration both internally and externally, and cultivate an organizational culture that aligns with long-term sustainable development goals.

Based on the assessment of the 16 risk events, 6 key material risks have been identified:

Emerging Risks

• Risk from climate change leading to more frequent and severe natural disasters

• Risks from transition to a low-carbon economy due to uncertainty in policies and international regulations and standards

• Risks from geopolitical conflicts, wars, and geo-economic confrontation

• Data security risks from the evolving cyber attacks

Other ESG Risks

• Health and safety risks in the workplace, transportation, and travel

• Human rights risks

Key Material Risks and Management

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Enterprise Risk Management Experience of SCG Non-Executive Directors
Regular Risk management Education for Non-Executive Directors