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Risk Management

Preparing for and
Responding to Risks

In the dynamic landscape of modern business, companies face an array of conventional and emerging risks. Navigating through intense competition, evolving regulatory frameworks, and economic fluctuations requires a steadfast commitment to effective risk management. At Nuvoco, we prioritise robust risk management as a cornerstone of our corporate governance and strategy execution. Utilising a comprehensive risk management system, we adopt a proactive and coordinated approach to address risks at every level of our operations.

Risk Governance Structure

The risk governance structure at Nuvoco is well-defined and comprises several key components including:

Nuvoco empowers both senior leaders and risk owners to champion risk management within their areas. This ensures consistent application of our established protocols. To further strengthen this approach, each business unit and functional leader has a designated Risk Champion who oversees the day-to-day risk management process. Our meticulously designed Enterprise Risk Management framework fosters organisational robustness and agility. It’s a comprehensive process encompassing risk identification, mitigation strategies, clear action plans, and periodic reviews.

Risk Management Framework

Our continuous risk management approach involves planning, early identification, analysis, corrective actions, monitoring, reassessment, and effective communication. We prioritise various operational aspects, including production, mining, and key ESG performance parameters such as community initiatives, employee health and safety, and environmental stewardship. We meticulously evaluate both short-term (technological, operational) and long-term risks (strategic, reputational) based on their potential impact and likelihood. This data is then woven into the fabric of our governance and business strategies, ensuring risks are systematically managed based on their severity and probability.

Risk: Raw Material and Fuel Price Volatility
  • Description

    Fluctuations in fuel and raw material prices pose threats to profitability

  • Increase in Severity of Risk/Decrease in Severity of Risk/Risk Severity Unchanged

    Decreased

  • Mitigation
    • Implemented the Project BRIDGE 1.0
    • Explored opportunities to integrate waste materials into manufacturing processes as alternative fuels
    • Conducted thorough research to identify cost-effective raw materials without compromising quality
    • Enhanced utilisation of Alternative Fuel and Raw Materials (AFR) to 13% to reduce dependency on traditional fossil fuels and mitigate environmental impact
  • Capitals Impacted
  • Material Issues Impacted

    Decarbonisation and Climate Change

  • Linkage with Key Focus Areas

    Expansion, Cost efficiency, Fuel mix optimisation

Risk: Technological Advancements
  • Description

    Failure to adopt the latest advancements could lead to increased production costs and reduced efficiency

  • Increase in Severity of Risk/Decrease in Severity of Risk/Risk Severity Unchanged

    Decreased

  • Mitigation
    • Regularly upgraded machinery and equipment to enhance efficiency and productivity
    • Trained employees to adapt to new technologies and processes effectively
    • Implementing programme DEN II, thereby increasing digitalisation
    • Planning to initiate Artificial Intelligence across functions
  • Capitals Impacted
  • Material Issues Impacted

    Data Security & Privacy, Risk and Crisis Management

  • Linkage with Key Focus Areas

    Innovation, Premiumisation, Brand strengthening

Risk: Transforming Economic and Industry Dynamics
  • Description

    Economic downturns and sluggish sector growth may hinder consumption

  • Increase in Severity of Risk/Decrease in Severity of Risk/Risk Severity Unchanged

    Unchanged

  • Mitigation
    • Working constantly to maintain a flexible business model to adapt to changing economic conditions
    • Strengthen relationships with suppliers and partners to navigate uncertainties collaboratively
  • Capitals Impacted
  • Material Issues Impacted

    Risk and Crisis Management

  • Linkage with Key Focus Areas

    Geo-optimisation, Brand strengthening

Risk: Increased Competition
  • Description

    Fierce competition may lead to erosion of competitive edge

  • Increase in Severity of Risk/Decrease in Severity of Risk/Risk Severity Unchanged

    Unchanged

  • Mitigation
    • Diversified product offerings to cater to evolving market demands
    • Added products with better features and upgraded portfolio to increase end-to-end solutions
    • Improved premiumisation strategies with premium products contributing 37% to the total trade volume
    • Ensured topmost product quality through strict and regular testing
  • Capitals Impacted
  • Material Issues Impacted

    Customer Centricity, Sustainable Product Innovation

  • Linkage with Key Focus Areas

    Brand strengthening, Innovation, Premiumisation, Trade share improvement

Risk: Regulatory Changes
  • Description

    Non-compliance with regulations may lead to legal expenses and reputational damage

  • Increase in Severity of Risk/Decrease in Severity of Risk/Risk Severity Unchanged

    Unchanged

  • Mitigation
    • Staying informed about upcoming regulatory changes and updates
    • Developing and updating internal compliance procedures to ensure adherence to regulation
    • Collaborating with industry associations and regulatory bodies to stay compliant and influence policy decisions
  • Capitals Impacted
  • Material Issues Impacted

    Business Ethics & Compliances

  • Linkage with Key Focus Areas

    Brand strengthening