TPCS Public Company Limited realizes that risk management is very crucial for business operations because it is an important tool for managing business, supporting the Company to achieve desired business targets effectively and efficiently and enhancing its competitive advantage. The Company has therefore specified the risk management policy that employees at all levels must take part in in order to drive for success and also created risk management guidelines which conform to international principle of the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In addition, the Company has established the Corporate Governance and Risk Management Committee (at the Company’s directors level) and the Risk Management Sub-committee (at the management level) to oversee, supervise, and ensure that overall risk management mechanism can suitably and efficiently support the business operations.
Risk Management Strategy
The Company has integrated the enterprise risk management system with the good corporate governance principles by taking into consideration expectation, interest, and roles and responsibilities of each group of the stakeholders within the organization and has classified risk management hierarchy into 3 levels as follows:
1) Risk Management at Corporate Strategy Level: This level gives priority to the review of a change in long-term business landscape, corporate strategy, direction of each business and long-term risk management for sustainability of businesses. The Company has appointed the Corporate Strategy Risk Management Working Group to supervise and ensure that risks will be effectively managed. Besides, proper communication and operation channels are specified so that the Board of Directors, the Managing Director, and top management can take part in.
2) Risk Management at Business Process Level: This level is about managing risks of supply chain which is the process to create and deliver value to the Company’s customers and important business processes which support such value creation and delivery. Risks at business process level will be managed via annual enterprise risk management channel which is held continually, where the Board of Directors, the Managing Director, top management and middle management will consider and determine risk management guidelines together.
3) Risk Management at Functional Process Level: This is the fundamental operational risk management that all functional units have to take responsibility in order to enhance the Company’ s operational excellence. Risk management at this level shall be mainly managed by functional unit heads under supervision and control of the Company’s top management via the annual enterprise risk management channel.
Classifying risk management hierarchy enables the Company to consider risks extensively, as it covers short-term and long-term risks, significance and urgency of each risk, related personnel and resources and relevancy of the management in each level and etc., it therefore helps the Company to manage risks effectively.
Risk from Lack of Capable Personnel
Uncertainty of the present economic situations which have a tendency to be prolonged and labor cost which has a tendency to increase may result in more intense competition to seize for capable personnel in the labor markets, even in the time Thailand has high unemployment rates, especially among the newly graduated students. Employment of personnel with higher capability and productivity can certainly support for competition, reduction of operation costs and expenses for personnel development of the organization, while employment of less experienced and capability personnel may not be able to help the organization to increase competitive edge and may lead to higher risks in competition, particularly during the weakening economic situation. In addition, the rise of international cooperation and trade liberalization nowadays may lead to fierce competition on employment of talent personnel. Hence, the Company may face higher risks from recruitment and retention of talent personnel and such risks may lead to loss or lack of personnel, continuity of business operations and loss of business opportunities, respectively. Therefore, the Company places importance on preparation of the successor development plan, career path development plan and proactive recruitment plan. Other plans are to employ more automation system and to provide trainings to personnel within the organization by the in-house experienced personnel and external experts to transfer body of knowledge to personnel within the Company from generation to generation which can keep knowledge remaining in the Company without disappearance when any personnel has been poached to work with other company and it can also make personnel within the Company gain knowledge and skills to strengthen productivity and quality operations by themselves, without relying on the recruitment of new personnel.
Risk from Cyber Threats Online theft of material information, i.e. business/trade secret, information on finance, and personnel may extensively impact the Company’s businesses and image. Hence, the Company has specified policy, criteria and practices on information technology security and placed importance on installation and update of Intrusion Prevention System (IPS), firewall system, and anti-virus software.
Supply Chain Risk
Persistent COVID-19 pandemic situations, severe natural disaster (great flood in China and in Thailand), severe accidents (i.e., fire), political unrest and shortage of shipping containers of international cargo ships which impacted supply chain risk management for continuity of business became the issues that the Company placed importance to in 2021. The Company constantly monitored changes of the above factors and set up suitable responsive guidelines, such as, management of supplier, advance reservation of important raw materials and production factors, management on continuity of production and human resources, to keep the Company’s business running as smooth as possible (Business Continuity). The Company also established many guidelines to mitigate those potential impacts, for example, construction of important factories or production lines in various areas, preparation of Disaster Recovery (DR) Site to prevent interruption of material operation systems in case main computer center has been impacted, transfer risks to other party to minimize impacts, such as purchase relevant insurance policies or request for cooperation from the business partners on provision of production support during the time the Company encounters emergency situation and etc.
Climate Change Risk
The Company is aware of climate changes as they lead to various forms of natural disasters in greater destructive extent, such as draught, flood, and forest fire, and they caused economic and social effects to global societies and countries continually. It is hard for the Company, as a part of economic and social sector, to avoid such effect. Thus, to help mitigate such risks and create sustainability for the economy and society as a whole, the Company has arranged many relevant activities, such as the reduction of energy and water consumption, the reduce-reuse-recycle of production wastes, as well as cultivating responsibility and conscious mind on environmental preservation to its personnel continually every year.
Health Safety Environmental and Social Risk
Occupational Health and Safety Risk The Company always places importance on building safety and hygienic working environment so that its personnel can perform the works happily and with safety. For this reason, the Company has specified the occupational health and safety policy, and appointed the occupational health and safety working group to promote and supervise the operations to ensure that they are suitable and in compliance with the relevant laws and regulations. The Company has also strengthened safety awareness and culture to all workers, by means of training arrangement, preparation of the safety-related emergency management plan, appointment of the emergency response working group, preparation of readiness on equipment and drilling etc.
During the coronavirus (COVID-19) pandemic situation, the Company took good care of its employees’ health and hygiene by strictly complying with recommendations of the Ministry of Public Health. The Company followed-up and notified its personnel of the pandemic information, proper self-protection method, and specified the pandemic preventive and control measures in the operations sites to be applied with the Company’s personnel and visitors, which included: screened all personnel and visitors with infrared thermometers before allowing them to enter into the operation sites, provided adequate face masks to its employees, ordered for social distancing and limiting the employees’ crowded gathering in operation sites, encouraged the employees to work from home where the intensity level has been adjusted pursuant to severity of locally spreading level; sprayed disinfectants and cleaned the operation sites and transportation trucks constantly, provided antigen test kits to employees and coordinated with the hospitals on procurement of vaccines to the employees, and more.
The Company also emphasized on human right and risk issues which may lead to encouragement or support for human right violation, both within the Company and within the business supply chain, and supervised to ensure that human right violation will never be taken place.
The Company has strong intention on anti-corruption in all various forms. It has then become a member of the Thailand's Private Sector Collective Action against Corruption (CAC) and the re-certification has been approved continually for the 2nd term in 2019. In addition, the Company has established the anticorruption working group to enhance and oversee the operations to ensure that they are suitable and complied with the relevant laws and regulations. Corruption risks have been constantly identified, assessed, managed, and monitored. And trainings to provide knowledge and awareness on corruption have also been arranged every year.to create awareness and anti-corruption culture within the organization
Post Covid-19 situation analysis, especially new normal practice, is other aspect that the Company put emphasis on as it believed that Thailand would accelerate on driving forward to become the medical and wellness hub to build public health security of the country, as well as driving for the electric vehicle industry. BCG economy and bio-circular-green economy will be moving at the faster pace for building sustainability. Outbreak of Covid-19 also increased online or virtual and technology world competition by leaps and bounds. Hence, the society will unavoidably place importance on healthcare and sanitation, particularly, preventive care, business sustainability, social responsibility, environmental protection, e-commerce and application of high technology with business operations.
As a result, post COVID-19 business operations will be more rigorously with regards to quality and standards of medical and healthcare products, criteria & regulations on business sustainability, social responsibility, reduction of energy consumption & pollution from business operations, cyber security standards, and etc. Business operations will be moved at higher speed and flexibility from application of high technology, i.e., automatic robot and other digital technologies, which consequently will lead to faster development of innovation, higher volumes of competitors and replacement products at faster speed, so the customers will have more choices. Therefore, if the Company lacks effective preparation, it may not be able to develop the operation systems to catch up with the potential changes that it may lead to loss of business opportunity, revenue, image or reputation.
The Company placed strong emphasis on development of innovation and standards of the products. In 2021, the Company could develop face mask innovation that receive the Thai Industrial Standards (TISI) certificate of Thailand’s Ministry of Industry and became Thailand’s first producer of face mask for all 3 levels, that is, level 1: face mask for general use; level 2: medical mask suitable for use in hospitals or laboratories where the wearers have opportunities to direct contact with fluids, aerosols of blood in low amount, i.e., general physician, emergency unit, dentist and etc., and level 3: medical mask ideal for use in surgical operations in hospitals or work units which have opportunity to contact with high amount of blood, secretion or other fluids. In addition, the Company could develop its operations under business sustainability framework that it has been listed in the Thailand Sustainability Investment or THSI list for 2 consecutive year (2020-2021). The Company also accelerated the development of its selling database system, IT system and efficient online supporting system. Big Data analysis system has been developed to support for better and suitable strategic sales planning to drive for actual digital transformation of the Company in the future. Consequently, online sales volumes grew by leaps and bounds that they could significantly compensate for the loss of revenue from automotive industry caused by external factors which were beyond the Company’s control.
Besides from development of innovation, standard of products, sustainability of operations and implementation of technology for use in operations as mentioned above, the Company also placed importance on improvement of environmental conditions and corporate culture to make them flexibility and can attract more capable new generation to work with the Company, so that the Company can develop and maintain competitiveness in the long term continually