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.
Geoeconomic Confrontation
Description Cause and Consequence:
The petrochemical industry is facing challenges from global economic and political factors, especially the uncertainties arising from geopolitics and increasing protectionist policies, such as the U.S. Tariff Policy, which may affect global trade markets and alter supply chains. These changes impact the company's production and export costs, as well as its key markets due to intensified competition. This situation adds complexity to supply chain management and maintaining competitiveness, which may affect the company's long-term profitability.
Category of Risk:
Geopolitical
Source of Risk:
Geopolitical Factor and Macroeconomics Factor
Business Impact:
- Petrochemical and plastic product prices are highly volatile, influenced by geopolitical risks such as the unpredictable and fluctuating U.S. Tariff Policy. These factors have disrupted trade flows and altered supply chains. Additionally, the global economic slowdown has led to reduced demand in downstream industries, falling short of projections. This has put pressure on profit margins, while production costs continue to trend upward.
- Uncertainty in international trade and political policies increases risks to medium- to long-term business planning (3–5 years to 5–10 years) and may delay new investments or market expansion initiatives.
- The rising inflation rate affects consumer purchasing power, while producers are unable to fully pass on the increased costs to the market.
- GC’s supply chain may face delays and increased costs, particularly for products and raw materials that rely heavily on international sourcing and transportation.
- Changes in government policies and more severe trade barriers may cause GC to lose markets and competitiveness.
Scenario Analysis:
GC conducts a scenario analysis at various raw material price situations to assess impact on long-term business plans and strategies. This requires the regular monitoring and review of related factors.
Timeframe:
Medium to Long Term 3-10 Years
Type of Impact:
Ecomomic Impact
Mitigation and Opportunities:
- Monitor and analyze economic and political situations, product standards and trade protection measures in various countries to assess their impact on the business and strategic plans, while identifying new market opportunities.
- Expand access to new markets with favourable international trade agreements to support exports, while developing customer networks in high-potential regions such as Asia-Pacific, the Middle East, and Africa
- Establish measures to enhance flexibility and optionality in markets and product portfolios, including exploring new opportunities arising from trade shifts. This aims to ensure stable sales and profitability, while enabling agile business adjustments amid geopolitical and trade uncertainties.
- Develop Scenario Planning to anticipate and mitigate the impact of potential changes and uncertainties in the future in a timely manner
- Take additional steps to improve risk management (hedging gains/losses) amid high volatility in the petrochemical market.
- Execute supply chain management by collaborating with suppliers to analyze risks, building cooperation and increasing the number of potential regional suppliers
Misuse and Abuse of Artificial Intelligence (AI) and Unable to Utilize Digital technology and Artificial Intelligence (AI) Transformation
Description Cause and Consequence:
While advances in Generative AI and other digital technologies create opportunities in enhancing industrial efficiency, they also pose risks and challenges, especially in terms of inappropriate AI use, such as data falsification, dissemination of false information, content creation, AI Deep Fake or other forms of fraud. These intensify the complexity and dangers of cyber security.
If GC fails to adapt and appropriately apply these technologies, it may lose its competitive edge. Therefore, GC is committed to developing technology and AI systems to enhance efficiency while strengthening robust safeguards. The application of AI in intelligent manufacturing processes, logistics, and supply chains helps reduce costs and improve performance. However, risks related to algorithm errors, cybersecurity, and over-reliance on automation must be carefully managed. Additionally, the use of AI in managing personnel and partners must be conducted transparently, respect human rights, and comply with data protection laws.
Amid rapid changes, GC recognizes the necessity of continuous investment 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.
- The use of AI in recruitment, procurement, or third-party screening must adhere to principles of fairness, transparency, and personal data protection.
- The rapid evolution of AI technology may render existing systems and tools obsolete, requiring continuous investment in workforce development, systems, and infrastructure 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:
- Disseminate knowledge on cyber security by conducting Cybersecurity E-learning to build awareness and encourage employees to enhance their knowledge of cybersecurity.
- 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
Change in Regulatory to Promote the Reduction of Plastic Use and Plastic Waste
Description Cause and Consequence:
Environmental policies and regulations both domestically and internationally aimed at reducing plastic use are becoming increasingly stringent. For example, the Global Plastics Treaty negotiations focus on strictly reducing single-use plastics. At the same time, Thailand has begun implementing Extended Producer Responsibility (EPR) measures, requiring producers to take full responsibility for their products throughout the entire product lifecycle. Several countries worldwide such as Sweden, South Africa, Chile, Japan, Taiwan, China, India and Vietnam have already enforced EPR laws. It is anticipated that Thailand will likely enforce EPR legislation within the next three to five years. This will impact the business operations of the Company, a major plastic manufacturer both in Thailand and globally.
Category of Risk:
Social and Environmental
Source of Risk:
Environmental 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.
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:
- Increase the proportion of plastic resin production for durable or semi-durable products to replace the production of resin used as raw material for single-use plastic products.
- Create opportunities to expand into recycled plastic products and environmentally friendly products by strategizing investments in recycled plastic businesses such as rPET and rHDPE.
- Collaborate with global tech startups and venture capital firms to access emerging technologies and seek investment opportunities in new technologies for use in production processes, business expansion, and addressing megatrends.
- Establish a comprehensive circular system for products and raise awareness of plastic waste management in partnership with stakeholders to promote effective recycling and upcycling.
- Seek, develop, and invest in advanced recycling technologies and infrastructure covering diverse methods such as mechanical recycling, chemical recycling, and others.
- Drive and support the transition to a low-carbon economy by collaborating with government, private sector, and civil society, while maintaining the competitiveness of the petrochemical business.
- Work with the private sector through the industry council to engage with the government on the potential impacts of policies that may affect the competitiveness of the domestic industry.
Climate Change Risk
Description Cause and Consequence::
The failure of climate change management measures by both the public and private sectors has led to rising greenhouse gas levels in the atmosphere, jeopardizing the goal of limiting global temperature increase to 1.5 degrees Celsius above pre-industrial levels. This could escalate environmental, social, and economic crises, including severe droughts, floods, and extreme weather conditions.
GC faces both physical risks and transition risks arising from extreme climate conditions. Examples of physical risks include droughts (including wildfires) and floods, which may significantly impact the Company’s operations. Transition risks include regulatory penalties and carbon pricing in high-emission industries. These regulatory developments may pose substantial challenges and could potentially lead to severe financial losses.
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 shift away from fossil fuel use may lead to a decline in the value of GC’s assets associated with 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:
- Develop business continuity plans to respond to disasters under various hypothetical scenarios.
- Assess future natural disaster risks in accordance with international standards under the IFRS S2 Climate-related Disclosures framework, evaluating potential impacts on company assets and operations. Continuously develop business continuity plans to address various disaster scenarios.
- Monitor drought conditions and manage water-related risks sustainably through the Water Management Taskforce. Implement initiatives to enhance water efficiency in production processes and secure alternative water sources to ensure sufficient supply for current operations and future projects, minimizing environmental impact and supporting long-term ecosystem sustainability
- Set a Net Zero greenhouse gas emissions target for Scope 1 and Scope 2 by 2050, aligned with the goal to limit the global average temperature increase to no more than 1.5°C, and guided by Thailand’s Long-Term Low Greenhouse Gas Emission Development Strategy (LT-LEDs). Additionally, GC aims to reduce Scope 3 emissions by 50% by 2050 as part of its climate change management approach across the entire value chain.
- Establish an organisational greenhouse gas emissions inventory to guide GC’s greenhouse gas management efforts.