Emerging Risk Monitoring
Emerging Risk Monitoring
GC constantly evaluates risks that may derive from external factors by following the Early Warning System that utilizes the PESTEL Analysis Framework (Political, Economic, Social, Technological, Environmental and Legal)
which oftens capturees the emerging risks that might have an affect to the company in short-term, middle-term and long-term. Therefore, the result from the Early Warning Systems would use as a proactive action to mitigate foreseable risks and to create growth opportunieis to the business operations.
Emerging Risk with Risk Descriptions, Potential Impacts & Mitigations
GC is well aware of the impact of the emerging risks that may affect during the next 3-5 year period to ensure proactive protection from future risk trends.
In this regard, GC has analyzed the potential risk factors and impacts that can affect the company's business operations. GC has developed the effective risk mitigation measure and continually monitored the emerging risks in medium and long term. These allow GC to achieve the goals according to the strategic direction.
Geopolitical & geoeconomic policy volatility
Description Cause and Consequence
The petrochemical industry faces feedstock supply and logistics challenges arising from the escalating conflict involving the United States, Israel, and Iran, which began in early 2026 and has repeatedly disrupted the Strait of Hormuz, the corridor carrying roughly a fifth of the world's oil trade. These developments have led to heightened security and policy uncertainty, including the suspension of shipping transits by major carriers, the withdrawal of war-risk insurance, and simultaneous disruption to the Red Sea route. This conditions has created uncertainty and pressure on global energy supply chains, resulting in vessel rerouting, extended transit times, and the emergence of new freight and insurance constraints. Impact the Company's feedstock procurement costs and limit its ability to secure and transport crude, and export cargo through the region, potentially affecting production continuity, operational efficiency and long-term profitability.
Category of Risk:
Geopolitical
Source of Risk:
Geopolitical Factor and Macroeconomics Factor
Business Impact:
Short (2026) and long-term impact to Petrochem industry:
- Sustained instability across Middle Eastern shipping corridors poses a structural risk to the feedstock supply routes which could potentially impact the company’s ability to maintain optimal operational capacity , . The cumulative effect on regional feedstock availability, freight economics, and scheduling reliability could fundamentally alter the cost and operational assumptions on which the Company's asset base was configured. In the long term, the Company may be required to reassess its feedstock diversification strategy, evaluate the resilience of its logistics network against persistent geopolitical disruption, and consider whether its current supply model and asset configuration remain aligned with an evolving global trade architecture. Failure to adapt proactively could result in a structural cost disadvantage.
- Persistent uncertainty over transit through conflicts constrain the long-term availability and predictability of crude oil for the operations. If restricted access to these corridors becomes a structural rather than temporary feature of global supply, the Company may need to secure alternative feedstock sources, renegotiate long-term supply agreements, or diversify its sourcing geography to preserve continuity of its continuous-process assets.
- Uncertainty surrounding the security and operational status of key maritime corridors contingent on the progress of geopolitical situation introduces significant price volatility risk across crude oil and petrochemical products. As the resolution of geopolitical conflicts and the recovery of flows through critical chokepoints such as the Strait of Hormuz remain unpredictable, the Company faces challenges in medium- to long-term business planning, potentially affecting the delay investment decisions and requiring the Company to further diversify feedstock sources and strengthen supply security measures to enhance resilience against future supply disruptions and market volatility. Beyond immediate supply disruption, prolonged conflict may force operational curtailment across continuous-process facilities, with restart and ramp-up timelines extending well beyond the disruption period itself.
For more information: https://www.pttgcgroup.com/en/document/viewer/192159/analyst-meeting-q1-2026
Scenario Analysis:
The Company conducts scenario analysis at various crude oil and naphtha price levels to assess the impact on its business plans and long-term corporate strategies. This requires regular monitoring, review, and updates of relevant scenarios and factors.
Timeframe:
Medium to Long Term 3–10 Years
Type of Impact:
Economic Impact
Mitigation and Opportunities:
- Monitor geopolitical developments, shipping advisories, and insurance market conditions including carrier and insurer announcements affecting key maritime corridors including the Strait of Hormuz and Red Sea to regularly assess potential impact on business operations, supply chains and corporate strategies. This enables proactive contracting before conditions deteriorate further, while supporting the evaluation of new sourcing and logistics opportunities through regular review and update of relevant scenarios.
- Establish measures to enhance flexibility in feedstock sourcing and shipping routes, including diversifying suppliers across multiple regions and maintaining higher buffer inventory levels, to ensure supply continuity and minimize reliance on a single corridor.
- Develop scenario planning and business continuity measures to anticipate and mitigate the impact of extended corridor-closure situations, including contingency production-rate adjustments, in a timely manner.
- Implement additional measures to improve risk management (hedging gains/losses) amid high volatility in freight and feedstock costs.
- Execute supply chain and logistics management by securing alternative chartering and insurance arrangements, coordinating with PTT Group and national energy security mechanisms, including strategic reserves, to plan jointly for prolonged disruption.
- Monitor and analyze conflict developments, shipping advisories, and insurance market conditions to regularly assess business impact and enable proactive contracting before conditions deteriorate further. In response, the Company has implemented mitigation measures across four dimensions:
- Feedstock and Optimization: Securing crude supply from existing and alternative sources while maximizing production output, including restart of naphtha cracker operations following scheduled maintenance.
- Risk Management: Actively managing hedging positions to mitigate product price volatility amid uncertain market conditions.
- Liquidity: Ensuring sufficient financial flexibility to meet elevated requirements driven by higher crude oil and feedstock costs, as well as any abrupt market normalization.
- Stakeholder Engagement: Supporting national industrial stability through compliance with government measures and emergency coordination mechanisms.
Misuse & Under-utilization of Generative & Agentic AI and Unable to Utilize Digital & AI Technology
Description Cause and Consequence:
The rapid advancement of artificial intelligence technology trends, including Generative AI and Agentic AI, creates business opportunities and enhances operational efficiency. However, these technologies also come with risks and challenges. In particular, the use of Agentic AI is increasingly growing. Agentic AI is a system capable of autonomous operation and decision-making in work processes, such as supply chain management, commodity trading, or machinery maintenance. This may create additional risks, including erroneous decisions due to incomplete data or algorithm bias, attacks or interference (AI Hijacking) that could disrupt production or logistics systems, excessive delegation of authority without proper oversight that may violate laws or ethics, and difficulty in auditing and explaining Agentic AI decisions (Auditability). These factors increase complexity and risks in the cybersecurity dimension.
Furthermore, the use of AI in managing personnel or business partners must be conducted transparently, with respect for human rights and compliance with personal data protection laws.
Amid rapid changes, the Company recognizes the necessity of continuous investment in digital technology and AI to maintain sustainable competitiveness.
Category of Risk:
Technological
Source of Risk:
Environmental Factor and Socioeconomic Factor
Business Impact:
- The use of AI increases the risk of cyberattacks, as malicious actors may exploit system vulnerabilities to access sensitive information or disrupt operations. This can affect business continuity and organisational security, potentially leading to revenue loss, reputational damage, and additional costs for system recovery or regulatory penalties.
- Operational risks in deploying AI in production, logistics, and quality control may arise from algorithmic errors or inadequate oversight, potentially causing malfunctions or disruptions in critical processes.
- Reduced competitiveness; if GC is unable to adapt to technological and digital changes, the company may lose competitiveness in terms of price, quality and market share
- Failure to utilize technology may cause delay in responding to customers and the market, resulting in the loss of stakeholder trust.
- Loss of opportunities and income; failure to respond to market demands leads to the loss of opportunities in new business and market expansion. Investment in new technologies presents opportunities in strengthening business for sustainable growth.
- AI-driven decision-making in areas such as machinery maintenance or supply chain planning may reduce human involvement and lead to flawed decisions in critical situations.
- If AI is attacked or malfunctions, it may cause severe damage to production, procurement, and logistics management, as well as legal and reputational risks.
- The use of AI in recruitment, procurement, or third-party screening may pose risks and impact the Company's reputation if not conducted in accordance with principles of fairness, transparency, and personal data protection.
- The rapid changes in AI and digital technology require the Company to continuously increase investment in developing AI and digital technology systems. Additionally, it is necessary to develop essential skills and enhance knowledge and understanding among employees to maintain competitiveness.
Scenario Analysis:
GC conducts a scenario analysis to assess the impact on long-term business plans and strategies, and continuously monitors and reviews relevant factors, including rapid technological changes that impact the supply chain and cyber security.
Timeframe:
Medium to Long Term 3-10 Years
Type of Impact:
Technological Impact / Societal Impact / Economic Impact
Mitigation and Opportunities:
- Establish a governance framework, policies, and standards for the use of artificial intelligence technology within the organization (AI Policy).
- Disseminate knowledge on cybersecurity by conducting Phishing Tests. Additionally, provide Cybersecurity Awareness training and implement Multi-Factor Authentication (MFA) systems.
- Improve cyber security and partner diversity to create a resilient supply chain and reduce costs.
- Regularly conduct Business Continuity Management (BCM), AI Deep Fake and Cyber Attack drills for relevant executives and employees.
- Invest in research and development (R&D) and build business partnerships to increase competitive edge and new business opportunities.
- Employ data analysis tools to increase operational efficiency and achieve effective decision-making, e.g., using AI to analyze market trends, as well as for forecasting and analysis purposes in order to optimize production process efficiency.
- Develop a technology and digital transformation plan to enhance competitiveness and boost efficiency.
- Formulate knowledge development plan regarding the use of AI for employees throughout the organization to increase work efficiency
Changes in regulatory affect consumer demand and shift market landscape
Description Cause and Consequence:
Environmental policies and measures, both domestically and internationally, are becoming increasingly stringent. Examples include Thailand's draft Climate Change Act and climate change policies of various countries. Additionally, in terms of plastic management, there are policies to reduce plastic usage, bans on single-use plastics, and promotion of environmentally friendly plastics, as well as efforts to raise environmental awareness among the general public. These factors are leading to a declining trend in plastic demand.
Additionally, there are government policies that may impact business operations and competitiveness, such as the new fuel pricing structure, among others. These measures result in increased operational costs for the Company, while consumers are increasingly prioritizing environmentally friendly products, which could affect long-term profit margins.
Category of Risk:
Social and Environmental
Source of Risk:
Environmental Factor and Regulatory & Societal Factor
Business Impact:
- Policies to phase out single-use plastics, plastic packaging taxes on non-biodegradable or single-use plastics (Plastic Tax), and sustainable packaging management under Extended Producer Responsibility (EPR) may reduce the Company’s competitiveness and sales revenue from single-use plastics. Additionally, these policies could increase costs due to investments in new product technologies, comprehensive plastic product management systems, and supply chain readiness with partners.
- GC must adjust its role and expand its responsibilities in the production and disposal of petrochemical products as well as various chemicals that may impact the environment. This requires GC to increase its investment both CAPEX and OPEX to develop and improve its production processes to be more environmentally friendly and establish comprehensive circular system for products.
- There may also be reputational and image impacts for the Company as a leading global chemical manufacturer.
- Demand for conventional plastics is declining due to increasingly stringent environmental policies, coupled with consumers shifting toward more sustainable products, impacting the Company's sales and revenue.
- Risk of losing business partners and opportunities in global markets that prioritize low-carbon products.
- Challenges in managing raw materials and supply chains for bioplastics, which have limitations in terms of availability and pricing.
Scenario Analysis:
GC monitors and analyzes major megatrends, as well as relevant measures, regulations, and laws related to its business operations. It also considers external factors such as consumer behaviour and the voice of the customer to drive innovation and technology development that enhance operational efficiency and product development, meet customer needs, and support the formulation of business strategies and plans.
Timeframe:
Medium-to long-term (3-10 years)
Type of Impact:
Economic Impact
Mitigation and Opportunities:
- Implement technologies that reduce energy consumption and greenhouse gas emissions in production processes by transitioning to renewable or low-carbon energy sources. This includes studying new technologies, such as using hydrogen as an energy source in production processes, to enhance competitiveness and reduce production-related greenhouse gas emissions in compliance with increasingly stringent environmental policies and measures.
- Collaborate with tech startups and venture capital (VC) firms globally to access emerging technologies and explore investment opportunities in new technologies for application in production processes, new business development, and alignment with megatrends.
- Restructure long-term business operations toward high-value, low-carbon businesses, such as developing sustainable products, bio-based products, sustainable aviation fuel, and specialty chemicals, to align with changing consumer demands.
- Drive and promote the transition to a low-carbon economy through collaboration with government, private sector, and civil society, while maintaining the competitiveness of the petrochemical business.
- Collaborate with the private sector through the Federation of Thai Industries to help the government understand the impact of various policies that may affect the competitiveness of domestic industries.
Climate Change Risk
Description Cause and Consequence
The Company faces risks from climate change, comprising both Physical Risks and Transition Risks.
Physical Risks are risks arising from the direct impacts of increasingly severe and frequent climate events, such as droughts, floods, and extreme weather conditions, which may lead to environmental, social, and economic crises.
Additionally, there are Transition Risks arising from changes in policies, regulations, and technologies aimed at achieving a low-carbon economy. In particular, Thailand's acceleration of its Net Zero target from 2065 to 2050 under NDC 3.0 impacts operations, supply chains, production costs, regulatory compliance, and long-term competitiveness.
Category of Risk:
Environmental
Source of Risk:
Environmental Factor and Socioeconomic Factors
Business Impact:
- Increasing severity of climate conditions may impact raw material sources and constrain the supply of crude oil or other fossil fuels, potentially disrupting GC’s production continuity.
- Ineffective greenhouse gas management could negatively affect GC’s image, credibility, and investor interest.
- GC’s operating costs may rise due to stricter environmental policies, carbon credit expenses, and investments in emission-reduction technologies to address climate change and comply with more rigorous regulations.
- Growing environmental awareness among consumers is driving demand for eco-friendly and low-carbon products, requiring GC to develop products that align with evolving consumer preferences.
- The global push to reduce fossil fuel usage may result in a decline in the value of the Company's assets linked to traditional petrochemical processes.
Scenario Analysis:
GC analyzes both internal and external risk factors to identify material impacts on its business operations resulting from climate change. This is conducted through qualitative and quantitative climate-related scenario analysis using models such as RCP 2.6, IEA 2DS, and IEA B2DS, as well as worst-case scenario assessments. The insights from these analyses are used to establish assumptions, set targets, and define strategic business directions that enhance GC’s ability to adapt and respond effectively to stakeholder expectations.
Timeframe:
Medium to Long Term 3-10 Years
Type of Impact:
Environmental Impact / Ecomomic Impact
Mitigation and Opportunities:
- Mitigate Climate Transition Risk by implementing greenhouse gas emission reduction projects (Scope 1 and 2) in alignment with the Company's Net Zero strategy and targets, as well as national Net Zero goals. These include operational efficiency improvement projects, application of energy-reducing technologies, renewable or low-carbon energy projects, CCS projects, and strengthening networks and partnerships with domestic and international allies to accelerate the development of innovations and technologies for greenhouse gas emission reduction.
- Develop contingency plans for climate change risks under various scenarios, such as monitoring drought situations and promoting water efficiency improvement projects in production processes, as well as identifying alternative water sources to ensure sufficient water supply for current plant operations. Additionally, regularly prepare Business Continuity Management plans to address disasters under different situations and scenarios.
- Develop design guidelines for production processes, plants, or buildings that consider the level of climate change impacts, such as average maximum ground temperature, average maximum rainfall, wind speed, and sea level rise, to ensure that the Company's production processes and buildings can withstand physical risks in the short, medium, and long term.
- Implement and disclose climate change information in accordance with International Financial Reporting Standards: IFRS S1 and IFRS S2, developed by the International Sustainability Standards Board (ISSB), to transparently and systematically inform stakeholders of climate change risks, opportunities, and the Company's management approaches.