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Corporate Governance
(Cont’d)
Group’s Signifcant Risks
On a quarterly basis, the ERM Team in coordination with the respective risk owners and Heads of Operating Units and Supporting
Departments, conducts a review and assessment on identifed risks based on controls in place, monitors implementation of agreed action
plans to further mitigate identifed risks and reports signifcant risks to the Board and the AC. The following are some of the signifcant
risks that are closely monitored:
1. Strategic Risks:
•
Planning – Inadequate planning and forecasting may limit the Group’s ability to anticipate and respond to internal and external
changes threatening its ability to make good decisions and take advantage of growth opportunities.
•
Sustainable Palm Oil – Changing of industry trends and requirements threaten the Group’s ability to ensure a sustainable
business operation resulting in an unfavorable perception amongst the stakeholders and loss of competitive advantage of
the Group.
•
Land expansion – Land is a major resource for the Group’s core business, hence, the unavailability/limitation on availability
of land threatens the Group’s ability to grow and achieve its strategic objectives.
2. Operational Risks:
•
Plant diseases and infestation of pests – Infestation of pests and diseases could result in lowering crops’ productivity and
potential death of trees.
•
Health and Safety – Failure to implement a system of occupational safety and health to protect the employees/workers from
accidents and improve their health conditions may expose the Group to excess cost associated with compensation liabilities,
fnancial loss, negative business reputation, and/or possible loss of life.
•
Resource Availability – Inadequate sources of raw materials, fertilizers, equipment, tools, component parts, etc. threaten the
Group’s ability to produce quality products on time at competitive prices.
•
Social Confict – Existing confict with the local communities which may affect the operations, limited/controlled access to areas,
higher operational costs due to plantation activities/operations could not be implemented effciently and threat to the safety of
workers.
•
Natural Disasters – Disasters such as fooding, drought, earthquake, fre, etc. which may result in property damage, stop/
delays in operations, lower productivity, higher operating costs and inability of the Group to provide products to its customers.
3. Compliance Risks:
•
Permits/Licenses/Land Ownership – The Group is exposed to the risk of loss of rights to the land due to failure to get the
appropriate land permit and proper licenses on time, overlapping ownership issues and third party claims.
•
Tax Compliance and Tax Authority Examination Management – Risk of failure to identify and prevent legal risks posed by
non-compliance with local jurisdictional and national government rules and regulations for tax compliance and dealings with
jurisdictional tax authorities.
•
Environmental – Non-compliance to environmental laws may expose the Group to regulatory sanctions, public protests,
security problems and imposition of fnes and penalties by the government.
4. Financial Risks
•
Credit – The Group is exposed to potential fnancial loss that may occur as a result of the possible credit default by smallholders.
•
Liquidity – Insuffcient access to available capital threatens the Group’s capacity to grow, execute its business model and
generate future returns.
The Management has implemented risk mitigation strategies and controls to address the above list of signifcant risks. This list is not
intended to be comprehensive, but to outline some of the signifcant risk faced by the Group.
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