Sensitivity Analysis
GC regularly conduct sensitivity analysis and stress testing to evaluate adverse consequences of events and prepare company's risk mitigation measures in short-term and long-term to enhance stakeholder's understanding of the financial vulnerability and viability of our organization. The cases are analyzed as below.
Long-term Financial Performance
Impact of external circumstances and factors on financial performance, including strategic planning.
GC analyzes financial situations by considering various factors, such as megatrend, industrial/market trend, technology breakthrough, environmental policy, regulation, and business, including geopolitical tension. This is to define the Group’s business scenario assumptions for long-term price forecasting as a part of the sensitivity analysis and to develop mitigation measures for preparing in advance to mitigate the risks and capture the opportunities in business operation.
GC conducts Stress Tests based on various possible scenarios to assess impacts on business plans and long-term corporate strategies while carrying out regular follow-ups, reviews and updates of situations and relevant factors.
Water Management
GC conducts a sensitivity analysis in the case of drought by exploring the water situation in major reservoirs based on rainfall assumptions, water consumption and simulations that analyze water shortage risks in various plant sites. GC also prepares measures to mitigate impacts, such as appointing a working group to monitor water situation, developing a business continuity plan for water consumption reduction and locating additional water sources, etc., in preparation for drought crises. In doing so, GC collaborates with both the government and the private sectors.
GHG Emissions
GC conducts a sensitivity analysis by comparing greenhouse gas emissions from new investment projects and greenhouse gas reduction from current operations against goals to assess the emission gap which is used to define goals and shape greenhouse gas emissions management guidelines in each business group.
GC set mitigation measures for GHG reduction by focus on expanding portfolio to downstream, enhancing energy efficiency integration and investing in energy saving technologies and alternative energy projects.
Competitiveness analysis in changing environmental situation
Analyzing economic and industrial situations amidst changes and different climate change policy intensities in order to identify key climate change impacts on business using Qualitative and Quantitative Climate-Related Scenario Analysis based on scenarios such as IEA NZE 2050, IEA STEPS, RCP2.6, RCP4.5, RCP8.5 etc. This is used to define assumptions, set goals, and determine business direction strategies that can appropriately adapt and respond to stakeholder expectations.
Financial Simulation Model
Conducting Sensitivity Analysis and Stress Tests on key risk factors influencing the organization’s net profit using a financial model to consider the impact on net profit as a result of changes in key factors, such as foreign exchange rates, crude oil price and main product prices, etc., to determine support, mitigation or potential loss reduction measures.