Risk Management Amid continued volatility and uncertainty brought on by external and internal factors, IRPC has stepped up preparedness in tackling difficulties that may arise by implementing enterprise-wide risk management. This is to mitigate against adverse events and their impacts on the company’s operations while enabling us to explore opportunities to invest in new businesses to ensure sustainable growth. The company has put in place a risk management structure with the creation of the Risk Management and Internal Control Committee and the Supply Chain and Hedging Committee to monitor and analyze market movements, hedge against price volatility of crude oil, petroleum, and petrochemical products, shipping rates as well as risks associated with financial transactions. These commitments are under the supervisory purview of the Board-appointed five-member Risk Management Committee, which provide supervisory oversight and advice the Board on the enterprise-wide risk management to make sure the company’s risks stay within the risk appetite. Such arrangement also inspires the confidence of all stakeholders. The Risk Management Committee ascertains that the company’s risk management complies with ISO 31000: Risk Management – principles and guidelines and COSO - Enterprise Risk Management, together with the Principles of Good Corporate Governance, Internal Control System, Business Continuity Management System, Anti-corruption guidelines, Sustainability Management and Operational Excellence Management System. At IRPC, risk management is an integral part of the corporate culture. The company instills in its workforce a risk management mindset. Executives and personnel are expected to have good working knowledge and understanding of risk management systems relevant to their lines of work to achieve the set objectives. They identify, continually monitor progress, improve, review risk management measures, and submit reports to relevant committees accordingly. Risk management knowledge must be disseminated through all available channels. The company has also fostered Governance, Risk Management & Internal Control Compliance, and Environmental, Social and Governance (ESG) Compliance to enhance risk management efficiency. Summary of Risk Management 1. Price Volatility Risk Feedstock and product prices remained highly volatile due to momentous events in 2023, particularly geopolitical conflicts and economic impact of COVID-19 pandemic from which many countries had not fully recovered. As evidenced economic by slowdown and prolonged high inflation among European countries, as well as liquidity crisis in China’s real estate sector and stagnating private consumption. Thailand’s GDP growth was lower than expected while exports contracted, and the impact of US monetary policy affected the country’s interest rates and weakened the baht. Prices of crude oil, the company’s primary feedstock, were driven by the impact of the Middle East conflict and output control of OPEC and OPEC+ that greatly affected the demand and supply of crude oil in the world market. All this was made worse by widening conflict that could lead to blockade of one of the world’s major shipping routes, driving up freight rates, thus affecting the company’s production costs. IRPC’s product prices depend on a number of factors. Product prices moved in tandem with main crude oil reference prices. In the meantime, China’s petrochemical demand indicators remained low, indicating that petrochemical product prices had shown no sign of recovery. 98 Risk Management IRPC Public Company Limited
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