Risk and Crisis Management

Management Approach

The Company recognizes numerous types of risks which could continuously affect the Company, thus a Risk Management Committee was established. The Committee is tasked with setting policies and corporate risk management approach. The risk management department and governance department jointly serve as risk management committees, enabling effective operation under the umbrella of good corporate governance, while maintaining alignment to the Company’s goal. Simultaneously, risk management committee is also responsible for reporting risk performance and present to the audit committee and the Board of Directors twice a year. This makes possible the reviews of corporate risk management process, as well as identification of a solution enhancing effectiveness of risk management for comprehensiveness.

Corporate Risk Management Structure

Notably, the Company has set up risk and crisis management framework for sustainable business operations, serving as an operation guideline on risk management framework. This ascertains management of risks that could potentially affect the Company’s operations and target achievement, as well as enabling thorough risk control plans in all aspects.

Risk and Incident Management Framework for Sustainable Business Operations

The Company categorizes risks that could potentially affect business operations into 3 groups, as follows.

  • Operational risks
  • Sustainable risks and non-financial risks
  • Emerging risks

Risk assessment is conducted annually, with training on relevant risk mitigation measures provided on a quarterly basis to numerous departments. Risk champions provided information, in tandem with provision of control mechanisms and monitoring in place, promoting employees to strictly follow protocols and regulations, being able to readily take actions in crisis management, and support the Company’s strategy.

Risk Monitoring and Internal Control Mechanism

  • Operated by Risk Champion
  • Risks assessed comprises
    – personal data privacy act (PAPD)
    – compliance per standards, process, the company’s regulation for relevant activities under COVID-19 pandemic
    – stakeholders’ grievance
  • In 2021, there was a total of
    65 high-risk process from
    285 processes assessed,
    encompassing marketing,
    product management,
    procurement, and
  • In 2021, there are 10
    control measures in place
    for 65 high-risks processes
  • Communication of risk
    control measures to
    information relevant
    individuals in tandem with
    Risk Champion
  • Auditors comprises of risk management department,
    Corporate Process
    Simplification epartment
    and audit department
  • Review by risk champions along with the process owner

Emerging Risks

The Company reviews issues and trends annually to analyze potential emerging risks and business risks, aiming to develop measures, management approaches, and responses to risks promptly. In 2021, the Company identified emerging risks, as well as impacts on business, setting measures, and management approach.

Risks from governmental regulations promoting packaging waste reduction

Greenhouse gas emission from plastics’ life cycle is presently high, resulting in failure to achieve the goal of reducing global average temperature by 1.5 degrees Celsius. Over 90% of plastics are produced from fossil fuel, the cause behind increased volume of greenhouse gas emission. Furthermore, Center for International Environmental Law (CIEL) reports emission estimation of plastic production-induced pollution globally to be equivalent to pollution emitted from coal industry over 189 plants. This may cause an increase in greenhouse gas emissions by 10-13% in The best approach to reduce plastic usage is to address it from upstream at the stage of production, reduce excessive use of resource, reduce plastic packaging, and increase recycled plastic products. This serves as a goal to initially optimize resource usage to minimize environmental impacts. The public sector’s governance and policy implementation on packaging are therefore highly crucial to enabling the principle of circular economy. Thailand has Thai Plastic Roadmap for 2018-2030, comprises 2 primary goals to reduce plastic and packaging waste, as follows. The first goal is to reduce and terminate plastic usage, opting for alternative and environmentally-friendly; the second goal is to recycled plastic waste for further benefits, encompassing plastic waste reduction at-source and post-consumption. At the moment, the aforementioned plan has progressed into phase 2 (2022-2027).1 The phase stipulated was one whose scope is expanded to cover termination of single-plastic packaging use, in tandem with developing the national process and fundamental infrastructure in reusing and recycling. One of the tools used for studies to substantiate policy development is Extended Producer Responsibility (EPR), in which producers must be accountable for the entire cycle, from designing, distribution, recalls, collection, reuse, recycled, and treatment of packaging waste post-consumption. The principle of extended producer responsibility is widely practiced in Europe, North America, South Africa, and some countries in Asia. It is likely to be implemented as a regulation in Thailand, which can directly impact retail businesses in the future.

The Company aims to work on plastic waste management under the Thai Plastic Roadmap continuously, supporting minimization of environmental impacts and response to the national policy, per Extended Producer Responsibility (EPR) principle. It is possible that within the next 3-5 years, it will become a regulations implemented domestically for all industries, affecting business operations throughout the Company’s value chain. Review of environmental operational plan, from upstream to downstream, is extremely crucial in driving forth the Company’s business. Furthermore, investment in reuses and recycles of packaging waste, as well as distribution of products rely on novel system and process, thus incurring additional costs to set up system or to operate (equates to investment of over 215 million Baht in the next 3-5 years). A nudge for legal actions per extended producer responsibility may affect the Company’s reputation if one does not have sufficient preparation throughout the supply chain.

The Company aims to minimize plastic waste and packaging waste landfilled, by promoting waste management under the principle of Circular Economy, in order to achieve target in plastic packaging management for Private Brand. It must be reusable, recyclable, or compostable, through the concept “reduce, avoid, stop” by operating per 3 primary approaches, as follows.

  • Reduce plastic usage at-source, stipulating policies and strategy in response to packaging selection of the product groups which are private brand, shifting towards eco-packaging; as well as initiating packaging development strategy in collaboration with suppliers, such as designing packaging anew to reduce plastic use, the shift for sealing and printed cling film, as opposed to thick plastic lid with stickers. There is also an adjustment for the packaging thickness or bottle sizes. Suppliers are asked for cooperation in development and selection of eco-packaging
  • Reduce and replace plastic usage at consumption stage; initiate strategic process in reducing single – use plastic use and commence campaigns to foster customers’ engagement
  • Reduce post-consumption Plastic, Non-Plastic Waste initiate strategy of recycling post-consumption plastics per the principle of circular economy in joint-efforts with suppliers, NGOs, communities, the public sector, local entities, global organizations, as prototype of recycling post-consumption plastic waste anew, such as plastic bottle-to-employee shirt, post-consumption plastic waste separation bin for recycling process

Researches from various institutes demonstrate possibilities of rising sea level. The data is derived from highly precise calculations from satellite images. Over 96% of Thailand’s Bangkok would be flooded if flooding occurs, encompassing over 1,512 square kilometers within the next 3-5 years. The economic damage could multiply, particularly in basins within Bangkok and the peripheral provinces, which are areas of business importance due to the high density of stores.

Notably, climate change-induced impacts such as rising sea level and seawater intrusion in freshwater sources, directly affect 7-Eleven stores in the river basin areas across 9 provinces, which are Bangkok, Samut Prakarn, Nonthaburi, Pathumthani, Saraburi, Chachoengsao, and Prajinburi. There are over 4,892 store branches. Post-flooding, there would be business disruption, additional cost for store fixes and rebuilding, expense in tool and equipment procurement to maintain water supply quality for businesses. In tandem, such incidents can impact products’ quality, as well as products and services requiring prior preparation, which must stop its sales as it got affected by seawater level and high-tide, resulting in saltwater intrusion of frequently sourced freshwater bodies. The Company would lose many business opportunities during such crisis. onsequently, the Company has conducted risk assessments, categorized into 2 dimensions, as follows.

  • Loss of sale opportunities for product groups necessitating good quality of water, such as All Café freshly made beverage, 7-Select beverage machine, and Slurpee. The expense to procure clean water for consumption, which can be valued at 1,000-1,500 million Baht, if the products and services cannot be provided for 7 consecutive days
  • Damage value after an insurance claim was an equivalent of over 2,644 million Baht, as assessed from deductible of the first part from the insurance claims and the insurance payout

The Company developed comprehensive risk policy and risk management plan, governed by Risk Management Committee. Climate change risk has been integrated as a risk factor against the Company’s business operations, aiming to review risk management approach thoroughly at least twice a year. This ensures risk management is aligned and is part of the decision behind determining business operation strategy. Simultaneously, the Company set up for Flood Scenario & Preparation plans for 7-Eleven stores, by studying for consistency with natural disaster statistics, coupled with the public sector’s risk assessment data, such as spatial climate change-induced risk database.1 This could be used to substantiate risk assessment of store branches in each areas, to develop business continuity plans, and post-incident restoration plan. The extent includes reports on impacts from rising sea levels, which may trigger floods and high-tides, subsequently culminating in saltwater instruction, directly to Risk Management Committee. This enables stipulation of directions and identification of crisis mitigation approach, such as.

  • Changes for high-quality water filters that could affectively filter salinity
  • Review and adjust conditions to select branch stores’ location, with considerations to the increasing sea level impacts
  • Set up water-resilient store project, to ready branch stores against floods starting from the process of designing, mid-incident, to designing for mobility in case of relocation when needed
  • Establish restoration plan for branch stores post-floods

It can be considered both opportunities and risks in business conducts. The challenges can be identified in 2 aspects, as follows.

  • Challenges in controlling fresh food’s quality to be at international standard throughout the product logistics and trans shipment Due to the difference in each country’s production standard and the contamination detection standard, both of which are one of the initial risks relevant to regional transportation system, whether imports or exports, the impacts of products failing to meet standards can cost the Company’s reputation, as well as expense from recalls unaligned with local standards
  • Competitive capacity of domestic suppliers, particularly farmers, SMEs and regional producers This is an apparent risk, due to the difference production scale, manpower drainage, excess production, which would impact the production budget. Small suppliers unable to adapt or compete at a regional level would be forced out of the market, culminating in reducing strengths and diversity of the supply chain. Assessing impacts to retail business’ fresh food product groups at over 234 SKUs, valuing over 850 million Baht per year or impacts throughout supply chain estimated to be 14,285 million Baht

The Company has sped up in fostering suppliers’ strength through various measures, ensuring SMEs suppliers are able to adapt and be ready to grasp sales and competitive opportunities at a regional level. This was achieved through promotional measures, as follows.

  • Support producers to enhance products’ quality and build distinction, difference, or capacity to present the products’ values in order to increase competitive capacity at a regional level
  • Purchase directly from farmers, including development of production by Siam Makro Public Company Limited under the CP ALL Group
  • Promote quality assurance to align with international standards, from plantation, trimmings, to packaging, in order to manage investment in production and create acceptance regarding products’ quality assurance
  • Foster marketing and sales channel, as well as purchasing and deliver product distribution channels to SMEs producers, enabling circularity and ensuring investment for further development

Cybersecurity and Data Management

The Company has improved the information technology system security to be in alignment with ISO 27001, aiming to raise awareness on cybersecurity and indispensable information of the Company, as well as personal data protection. These are considered pivotal enterprise risks. The following projects were accordingly implemented.

Cybersecurity is one of the crucial risks occurred due to transition from offline business operations to online. This resulted in the Company consistently being exposed to risks, as everything occurs in fraction of a second. The Company thus set up cybersecurity management. In 2021, the Company conducted the following.

  • Improve policies to be in alignment with ISO 27001 Information Security Management and ISO 27701 Privacy Information Management
  • Communicate and raise awareness regarding key policies on cybersecurity, relevant cyber threats and cautions, as well as practices and recommendations to work confidently and securely through various channels, such as corporate website, and Cyber Portal, to name a few
  • Educate on topic of relatable cybersecurity to be cautious about, practices for confident and safe usage, to students of both Panyapiwat College of Technology (PAT) and Panyapiwat Institute of Management (PIM)
  • Cyber security drills test for all levels of employees using a simulation to build familiarity and accurate response or handling
  • Cyber Incident Response workshop according to plan on a simulation site to create familiarity for accurate response and handling. Results from the workshops would become input for improving the Incident Response Plan (IRP)

  • Announce work process in alignment with PDPA
  • Disseminate knowledge on PDPA for all levels of employees, as well as improving work process that pertains to personal data to be in compliance with PDPA
  • Organize activities on personal data protection for all levels of employees, such as training, seminars, assessment on participating employees’ understanding, to name a few
  • Distribute and promote PDPA Mindsets for employees, comprises 1) Respect others’ privacy 2) Transparency, and 3) Accountability, through both offline and online channels, such as posters, websites, PDPA Portal, and CP ALL Connect
  • Apply for certification of ISO 27001 Information Security Management and ISO 27701 Privacy Information Management from All Member’s data management process
  • Develop and utilize information technology to apply for business operations under the security measure which safeguards confidentiality, integrity, and availability of all information

Black Swan Search

The Company has continued the Black Swan project for the 8th consecutive years to raise awareness on risks for the Company’s personnel. Management and employees are encouraged to take part in identifying enterprise risk that could potentially impact the Company’s operations and goals through submission of risk
topics in a contest, available at various channels. The risks topics are related to the below 6 issues, as follows.

Risk issues awarded would be considered for development and implementation of appropriate mitigation and management measures, paving the way to effective implementation. In 2021, a total of 2,671 risk topics were submitted by employees. Among them, the top 5 risks submitted comprise COVID-19 pandemic, confidential data leakage, negative comments on social media, safety, and miscommunication both internal and external.

Furthermore, the Company organized for Risk Score assessment to measure departmental risk management capabilities, as well as providing feedback for improvement and enhancement of effectiveness in risk management system for all areas, covering over 70 departments quarterly. There were also advisory services online, as well as exchange of knowledge and best practices to increase capacities in risk management via Risk Score Clinic weekly. Departments with consecutive excellent performances would be recognized by Enterprise Risk Champions and the Chairman. Lessons learned were then disseminated to risk champions to further improve. Seminars for risk champions were organized on a quarterly basis to elevate the level of risk champions’ knowledge and skills to be ready for strategic, operational, financial, regulatory, sustainability and governance risks. There have been over 500 participants.

Other Information

Sensitivity Risk

1.Business Environment Risk

According to business expansion continuously, the Company is aware of development of GHG emissions reduction initiatives for various operations, including research, pilot projects, and applied to the business as well as collaboration program with stakeholders thought value chain. Under continuously development principle, the Company has preliminary studied on advance sustainability targets, being a carbon neutral organization or net zero carbon 2030 afterward. The Company has simulated 3 GHG emissions reduction scenarios (shown in diagram 1) which all cases are linked with the business growth. Additionally scenario has been performed by limiting volume of carbon offsetting at 20% of projection BAU case in 2030. The offsetting cost of all remaining carbon emissions will be used for range determination.

Results are indicating cost that associated climate change mitigation and linkage with business case which reflect effort and preparations required for co-mitigating the global issue.

Diagram 1 GHG emissions and carbon offsetting

Data Analysis
(inputs and factors used for the analysis)
Voluntary Emission Reduction 42.72 Euro / tonne
Exchange rate 38.37 Bath / Euro
Carbon emissions forecasting 2030 (CEF2030) 3,042,632.71 tCO2e
Target limited GHGs growth at 4% 2,086,322.77 tCO2e
Target GHG reduction at 4.2% each year 1,764,726.97 tCO2e
1% of revenue 2020 5,465.90 MTBH

Table 1: Sensitivity analysis for carbon offsetting on target year 2030 scenario

Unit (million THB)
Carbon pricing valuation -10% -5% +-0% +5% +10%
Carbon emission (CEF2030) 4,488.64 4,738.01 4,987.38 5,236.75 5,486.12*
Targeting Limit GHG emission at 4% growth against BAU 3,077.85 3,248.84 3,419.83 3,590.82 3,761.81
Target GHGs reduction at 4.2% each year 2,603.41 2,748.05 2,892.68 3,037.32 3,181.95

* exceeded threshold at 1% of revenue

2. Compliance Risk and Operation Risk

Sensitivity Analysis of Future Salary Growth and Employee Turnover Rate

Consolidated Financial Statements
  1% increases in assumption 1% decrease in assumption 3% increases in assumption 3% decrease in assumption 5% increases in assumption 5% decrease in assumption
2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020
At 31 December (in million Baht)
Future salary growth 449 429 (398) (380) 1,347 1,287 (1,194) (1,140) 2,245 2,145 (1,990) (1,900)
Employee turnover (432) (415) 467 442 (1,296) (1,245) 1,401 1,326 (2,160) (2,075) 2,335 2,210

Separate Financial Statements
  1% increases in assumption 1% decrease in assumption 3% increases in assumption 3% decrease in assumption 5% increases in assumption 5% decrease in assumption
2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020
At 31 December (in million Baht)
Future salary growth 282 265 (247) (234) 846 795 (741) (702) 1,410 1,325 (1,235) (1,170)
Employee turnover (275) (257) 318 295 (825) (771) 954 885 (1,375) (1,285) 1,590 1,475

3.Market Risk

Sensitivity Analysis of Discount Rate

Consolidated Financial Statements
  1% increases in assumption 1% decrease in assumption 3% increases in assumption 3% decrease in assumption 5% increases in assumption 5% decrease in assumption
2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020
At 31 December (in million Baht)
Discount Rate (439) (406) 473 466 (1,317) (1,218) 1,419 1,398 (2,195) (2,030) 2,365 2,330

Separate Financial Statements
  1% increases in assumption 1% decrease in assumption 3% increases in assumption 3% decrease in assumption 5% increases in assumption 5% decrease in assumption
2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020
At 31 December (in million Baht)
Discount Rate (267) (240) 288 279 (801) (720) 864 837 (1,335) (1,200) 1,440 1,395

Related Policy and Guideline

Risk Management PolicyDownload