Risk Management Risk Management Policy and Plans In response to uncertain circumstances brought on by external and internal factors, IRPC has stepped up preparedness in tackling difficult situations that may arise by giving priority to enterprise-wide risk management. This efficient and effective tool wards off threats and mitigates adverse impacts as the company continues on its quest for new business opportunities to achieve sustainable growth. The company has put in place a risk management structure with the creation of the Risk Management and Internal Control Committee, consisting of senior executives and chaired by the President and Chief Executive Officer. The Hedging Committee was also established to monitor and analyze market movements, hedge against price volatility of crude oil, petroleum and petrochemical products, shipping rates as well as risks associated with financial transactions. In addition, the Board of Directors has also appointed the five-member Risk Management Committee to provide supervisory oversight and give advice on the enterprisewide risk management to make sure the company’s principal risks stay within the predetermined appetite. To inspire the confidence of all stakeholders, the Risk Management Committee ascertains that the company’s risk management is in compliance with ISO 31000: Risk Management - Principles and Guidelines and COSO - Enterprise Risk Management together with the Principles of Good Corporate Governance, Internal Control System, Business Continuity Management System, Anti-Corruption Guidelines, Sustainability Management, and Operational Excellence Management System. At IRPC, risk management is promoted as an integral part of the corporate culture. The company instills in its workforce a risk management mindset. Executives and personnel are expected to have good working knowledge and understanding of risk management systems relevant to their lines of work to achieve the set objectives. They identify, continually monitor progress, improve, review risk management measures, and submit reports to relevant committees accordingly. Risk management knowledge must be disseminated through all available channels. The company has also fostered Governance, Risk Management & Internal Control, and Environmental, Social and Governance (ESG) to enhance risk management efficiency of enterprise risk management. Risk Factors Facing IRPC’s Businesses Summary of Risk Management Price Volatility Risk The highly volatile crude oil prices in 2022 were driven by extraordinary market conditions, especially the RussiaUkraine war from February, drawing varied responses around the world. Many European countries have imposed sanctions to stop oil imports from Russia, which has been banned from certain international financial networks. Oilproducing OPEC and OPEC Plus adjusted their outputs. China remained in lockdown for much of 2022. All these factors caused supply chain disruption, swayed investor sentiments, which in turn caused oil prices to fluctuate and pushed price premium to unusual height, putting pressure on low petrochemical spread due to falling demand and excess supply. Such factors also influenced the quarterly results. To mitigate impacts, IRPC has undertaken the following risk management approach: • Closely monitored and analyzed crude oil price movements triggered by events around the world, conducted price projections, and reported to the management to keep them informed on a regular basis, or called an urgent meeting as needed to ensure effective and timely response. • Procured new crude oil types as feedstock for production to cushion against impact of price volatility on production cost as well as to maximize benefits to the company. 56-1 One Report 2022 94 IRPC PUBLIC COMPANY LIMITED
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