Risk Management
Management Approach
The Company has adopted internationally recognized frameworks, including COSO ERM and ISO 31000, to establish its risk management approach aimed at preventing and mitigating potential impacts from various risks. This approach is designed to enhance stakeholder confidence in the Company’s ability to operate effectively amid today’s rapidly changing environment, while being fully integrated with the corporate strategic planning process and aligned with the sustainability policy. Risk monitoring and assessment are conducted on a quarterly basis and overseen by the relevant committees in accordance with the enterprise risk management governance structure.
Strategies and Actions
The Company has established a risk management framework divided into
1. Corporate Risk Management
This involves the assessment of the organization’s key risks arising from both internal and external factors, including future trends that may impact the corporate goal in the short, medium, and long term. It covers risks related to strategy, operation, finance, and reputation. Risk severity and likelihood are evaluated, and risks are prioritized using a Risk Matrix.
Key Risk Factors Affecting Business Operations
Risk from Raw Material and Product Price Volatility
Key Risk Management Measures
- The Refinery and Oil Trading Business Group closely monitors volatile oil price conditions and undertakes partial oil price hedging.
- Extended the turnaround maintenance cycle to every four years.
- Control crude oil and finished product inventory levels in alignment with production and sales plans to manage price risk.
Risk from Sustainable Aviation Fuel (SAF) Project
Key Risk Management Measures
- Closely monitor price movements of feedstock and products.
- Source used cooking oil (UCO) from both large and small scale suppliers, in collaboration with the Department of Health under the “No Refly” campaign, with UCO collection facilitated through Bangchak service stations nationwide.
Risk from Exchange Rate, Interest Rate and Financial Ratio Volatility
Key Risk Management Measures
- Manage foreign currency revenues and expenditures through a natural hedging approach.
- Structure the majority of the Company’s financing portfolio on a fixed-rate basis.
- Closely monitor trends and developments in the financial markets.
Operational Risks Impacting Communities and Society
Key Risk Management Measures
- Develop and enhance the occupational health and safety management system in accordance with international standards.
- Manage operational risks through the application of SIL, RCM, and RBI systems.
- Install online air quality monitoring systems in areas surrounding the Bangchak Phra Khanong Refinery and nearby communities.
Cybersecurity Threats and the Application of AI in Operations (Emerging Risk)
Key Risk Management Measures
- Establish a Digital Technology Center responsible for planning, monitoring, and sourcing digital technologies to enhance organizational preparedness.
- Establish a cybersecurity function responsible for planning, monitoring, surveillance, testing, and deploying tools to mitigate risks arising from cyber threats.
- Obtain certifications under international standards, including ISO/IEC 27001:2022, ISO/IEC 27032, and ISO/IEC 27018.
2. Investment Project Risk Management
Project risks that may arise at each phase of project implementation have been identified and analyzed as follows:
Development Phase Risk
Construction Phase Risk
Operation Phase Risk which include operational risks, financial and tax risks in accordance with the tax policies of the country in which the business investment is made, as well as reputational risks
Natural Disaster Risk
3. Business Continuity Management
To ensure continuous business operations even in times of crisis, the Company has implemented a business continuity management system, focusing on readiness in strategy, processes, and resources.
This effort has been certified under the ISO 22301 business continuity management standard, covering the head office, Bangchak Phra Khanong Refinery, Bangchak oil distribution centers, Central Region Business Office and Bang Pa-In Terminal since 2013.
