Risk Management
We are committed to continuously strengthening our risk management framework to ensure effective identification, assessment, monitoring, and mitigation of risks across all dimensions—business, environmental, social, governance (ESG), as well as digital and technological threats. Our approach is integrated into strategic decision-making processes at all levels, empowering the organization to navigate uncertainties and adapt to change while upholding stakeholder trust and long-term value creation.
Risk Management
Charoen Pokphand Group places strong emphasis on risk management at all levels of the organization to enhance business resilience and sustainability amid a rapidly changing environment.
The Group has established a comprehensive enterprise-wide risk management framework and regularly reviews the risk governance structure to define clear roles and responsibilities. This includes ongoing communication, risk-related training, and knowledge sharing across the organization.
C.P. Group adopts the Three Lines of Defense model for risk management, with a focus on implementing the first two lines as follows:
First Line of Defense: Risk Management by Operational Units
Business units and frontline employees, including risk managers and heads of business units, are directly responsible for identifying, assessing, and managing risks in daily operations. They are tasked with implementing control measures, monitoring key risk indicators, and regularly reporting progress on risk mitigation.
Second Line of Defense: Oversight and Risk Management Support
The Corporate Risk Office (CRO) and designated risk management committees at the executive level establish risk management frameworks, policies, and standards. They provide oversight, guidance, and independent validation of risk controls, ensuring compliance with internal policies and regulatory requirements.
Third Line of Defense: Independent Internal Audit Department
The Internal Audit department functions independently from management and reports to the Audit Committee. It provides objective assurance on the effectiveness of governance, risk management, and compliance processes, including operational, sustainability, and emerging risks.
Risk Analysis
Charoen Pokphand Group has developed a comprehensive Enterprise Risk Management (ERM) system based on the internationally recognized COSO ERM framework. This system enables the organization to effectively identify, assess, respond to, and monitor risks across the entire business value chain.
In the risk identification phaseCharoen Pokphand Group conducts joint assessments involving senior executives, subject matter experts, and the risk management unit. This process considers both internal factors—such as operational processes, organizational structure, and the use of technology—and external factors, including economic changes, new regulations, environmental conditions, and social trends. Risks are identified at both strategic and operational levels using tools such as SWOT Analysis, PESTEL Analysis, and Risk Workshops that gather input from diverse stakeholders.
For setting risk appetite, Charoen Pokphand Group applies a combination of top-down and bottom-up approaches. The process begins with senior-level committees defining the overall risk tolerance framework of the organization. Business units then adapt these guidelines to fit their specific operational contexts.
Tools used to define risk appetite include risk rating systems based on likelihood and impact, and the use of heat maps to highlight high-priority risks requiring focused management. Additionally, risk criteria are developed to align with strategic objectives, identifying risks that could affect performance, corporate image, or stakeholder trust.
The organization’s risk appetite is reviewed at least annually, or whenever significant changes occur, such as business expansion, new investments, or policy shifts. This ensures that risk management practices remain current and responsive to an evolving environment.
Charoen Pokphand Group’s risk analysis encompasses business-related risks as follows:
Climate Change and Extreme Weather Events
Risk Impact:
Climate change and extreme weather events are among the most significant risks that continue to impact the global economy. Extreme weather events, e.g., heat waves, heavy rains, droughts, and severe storms, are gaining in frequency and severity, while producing negative impacts on natural resources, food security, infrastructure security, and overall economic stability. With businesses in agriculture, food, production and transportation, Charoen Pokphand Group is directly exposed to the impacts of climate change, such as damage to agricultural crops, reduced food production, damage to property and infrastructure, risks to transportation continuity, fluctuating energy costs, and impacts on consumer behavior and sustainability expectations. In addition, unpredictable weather events increase risks to the supply chain, which may lead to systemic impacts on the Group’s operations.
Risk Management:
Charoen Pokphand Group has implemented a systematic climate change risk management approach to mitigate the impacts of such risks, including planning climate adaptation at the business and supply chain levels, investing in climate-resilient infrastructure, promoting sustainable production and agriculture, and accelerating the development of innovations and technologies that enhance adaptive capacity, e.g., precision agriculture and the use of renewable energy systems within the organization. The Group is also committed to achieving greenhouse gas reduction targets and enhancing the ability to manage water and natural resources with efficiency.
Geopolitical Stability
Risk Impact:
In a business environment where international tensions, trade conflicts and geopolitical uncertainties are becoming increasingly complex and severe, Charoen Pokphand Group is aware of the potential risks from policy changes, trade control implementation and investment restrictions, which could directly impact the Group’s international operations, in terms of supply chain delays and disruptions, fluctuating raw material costs due to trade restriction, and overseas investment risks due to changes in laws and regulations. In addition, reputational risk may arise if the Group’s trade partners encounter conflicts or become subject to international sanctions.
Risk Management:
Charoen Pokphand Group has implemented comprehensive risk management measures to address geopolitical stability risks, e.g., diversifying production bases, supply bases, and target markets to multiple countries, closely monitoring and analyzing international situations, developing strategic partnerships with partners in various countries, formulating contingency plans and business recovery plans in case of emergencies, and strengthening governance of overseas investment by taking into account all aspects of legal, social, and environmental factors.
Cybersecurity Threats and Breaches
Risk Impact:
The rapid advancement of technology, particularly Artificial Intelligence (AI), has significantly enhanced the capabilities of cybercriminals to conduct increasingly sophisticated and difficult-to-prevent attacks on information systems. Incidents such as data breaches, malware attacks, and assaults on critical infrastructure, can have widespread consequences on consumer confidence, business continuity, and economic stability. For Charoen Pokphand Group, cybersecurity risks pose significant impacts across various dimensions of operations. These include the risks of customer and supplier data leakage, digital business system disruption, loss of revenue, penalties due to violations of personal data protection laws, as well as reputational damage and loss of stakeholder trust.
Risk Management:
Charoen Pokphand Group has implemented comprehensive preventive and response measures to strengthen cybersecurity and reduce risks posed by cyber threats, including investment in advanced cybersecurity technologies, e.g., proactive threat detection systems and cyber incident response platforms; development of cybersecurity policies and practices covering all business units; regular employee training and awareness programs on cyber security; and the establishment of a business continuity plan aligned with cyber risks. Additionally, cybersecurity measures are regularly reviewed and tested to ensure effective management of cyber threats, reinforcing stakeholder confidence and supporting secure growth in the digital economy era.
Food Safety and Biosecurity
Risk Impact:
The outbreak of animal diseases, zoonotic diseases, and contamination within the food chain has escalated food safety and biosecurity to critical risks. A lack of systematic management can result in widespread impacts on consumer health, food security, and confidence in the global food production and distribution systems. As Charoen Pokphand Group plays a significant role in the global food chain, risks related to food safety and biosecurity have a direct impact on our operations. These include legal and governance risks, consumer health and safety risks, as well as reputational risks and loss of stakeholder confidence.
Risk Management:
Charoen Pokphand Group has implemented stringent quality and safety control from upstream operations. The Group adopts international food safety standards, such as HACCP, GMP, ISO 22000 and BRC, in our production processes. We have also developed traceability systems that allow precise tracing of raw material sources and production processes. Furthermore, the Group has strengthened animal disease and emerging infectious disease surveillance systems. In this regard, the Group continues to invest in research and development to elevate biosafety standards.
Supply Chain and Logistics Disruption
Risk Impact:
The fragility of global supply chains and logistics systems has emerged as a major risk with broad economic implications. This is driven by pressure from trade conflicts, geopolitical uncertainties, climate change, and increased reliance on limited transportation networks, all of which are disrupting the flow of goods and raw materials while exerting pressure on price stability, global demand and supply, and long-term business viability. With operations across various industries, such as agriculture and food, commerce, e-commerce, automotive, energy, and transportation, Charoen Pokphand Group is faced with the risk of supply chain and logistics disruption with multifaceted impacts, such as production and delivery delays, increased operating costs, customer service disruption, and reputational risks that could undermine stakeholder confidence. Moreover, delays or shortages of critical raw materials may impair the Group’s competitiveness in both domestic and international markets.
Risk Management:
Charoen Pokphand Group has adopted proactive strategies to enhance the resilience and readiness of our supply chain, such as diversifying sources of raw materials and suppliers to reduce single-source dependency, investing in digital technologies to optimize the efficiency of supply chain management, leveraging predictive analytics to anticipate risks and potential disruptions, strengthening domestic and international logistics capabilities, and systematically developing contingency plans and supply chain recovery plans.
Emerging Risk
In addition to analyzing risks related to business operations, Charoen Pokphand Group has adopted a renewed risk assessment approach that incorporates multiple perspectives. This includes issues relevant to the Group’s entire business, its partners, and all stakeholder groups. The Group also considers potential impacts across different timeframes in order to evaluate the level of risk and determine appropriate mitigation measures.
Violations of AI Governance and Digital Ethics
Risk Impact:
The development and application of Artificial Intelligence (AI) technologies are accelerating transformative changes in business models across various sectors. As a result, regulators around the world are focusing on formulating new policies and regulations to ensure the responsible use of AI. At the same time, digital ethics issues, such as fairness, transparency, data security and personal rights protection, have come under heightened scrutiny. The absence of clear regulatory frameworks or the careless use of AI technologies can lead to business and societal damage, creating reputational, trust and compliance risks for organizations. Charoen Pokphand Group, which operates in multiple industries and implements digital technologies and AI in telecommunications, e-commerce, financial services and internal management systems, faces risks from changes in AI regulations and digital ethics requirements, including legal risks from non-compliance with new regulations, consumer trust risks, algorithm bias risks, and potential personal data leakage or breach.
Risk Management:
To manage risks associated with AI governance and digital ethics, Charoen Pokphand Group has implemented comprehensive operational guidelines covering multiple dimensions, including establishing standards for AI development and application based on transparency, accountability, and respect for individual rights; continuously monitoring and assessing risks associated with AI application across all processes; enhancing knowledge and understanding of AI and digital ethics among executives and employees at all levels; forming a task force to oversee the responsible development of technology; and preparing the organization legally to comply with emerging AI-related laws that may be enforced in the future. These initiatives support the Group’s commitment to responsible usage of AI and technology guided by the principles that uphold individual rights, fairness, and long-term social impacts, in order to build stakeholder confidence and enhance sustainable competitiveness in the digital economy era.
Biodiversity Loss and Ecosystem Collapse
Risk Impact:
Charoen Pokphand Group recognizes the growing risks arising from natural environment degradation, driven by climate change, overexploitation of resources, and the expansion of unsustainable economic activities. These trends are accelerating the decline of critical ecosystems, such as forests, wetlands, coastlines, rivers, and marine ecosystems, while also contributing to the continued loss of biodiversity. The collapse of ecosystems and decline of biodiversity pose direct impact on the Group’s operations, including the stable sourcing of agricultural raw materials and animal feed, reduced crop yield in the agricultural sector, rising costs for managing soil and water resources, and long-term risks in the supply chain. Furthermore, ecosystem degradation undermines nature’s ability to sequester carbon, which may hinder the Group’s ability to achieve long-term greenhouse gas reduction targets. This also increases the likelihood of stricter regulatory oversight and greater pressure from stakeholders regarding the conservation of natural resources.
Risk Management:
Charoen Pokphand Group has adopted proactive measures to manage risks related to biodiversity loss and ecosystem collapse. The Group emphasizes on raw material sourcing and production practices that respect nature’s regenerative capacity by expanding the use of certified sustainable raw materials and production sources according to international standards; applying modern agricultural technologies and innovations to improve natural resource efficiency and reduce environmental impact; implementing ecosystem restoration and conservation projects in areas where the Group operates or has business relevance, such as reforestation, land rehabilitation, and conservation of natural water sources. Additionally, the Group has developed a comprehensive biodiversity risk assessment process to identify key risks in operational sites and develop proactive management plans to reduce impacts on ecosystems, while promoting local community participation in natural resource conservation to foster long-term mutual growth between businesses and communities under a strategy that prioritizes harmonious coexistence with nature.
Water Resource Scarcity
Risk Impact:
Water scarcity has become an increasingly severe systemic risk in many regions, driven by climate change, urban population growth, the expansion of agricultural and industrial activities, and inefficient water resource management. The risk of water scarcity affects not only food security and hygiene but also has significant implications for long-term economic and social stability. For Charoen Pokphand Group, which operates across various industries, ranging from agriculture to services, water scarcity poses a direct impact on the continuity of production processes, operating costs, and the ability to deliver products and services efficiently. This risk is likely to increase in regions where the Group operates that are frequently affected by droughts or where competition for water resources exists among different sectors. This can lead to stricter government restrictions on water use, rising water management costs, or long-term risks to sustainable business operations. Furthermore, water scarcity may strain relationships with local communities, especially if industrial water use competes with water needed for domestic consumption.
Risk Management:
Charoen Pokphand Group has adopted a systematic approach to managing water scarcity risks. Accordingly, the Group focuses on enhancing water efficiency in production processes, investing in water recycling and reuse technologies, and exploring alternative water sources at operational sites. In addition, the Group integrates water conservation measures across the supply chain and promotes cooperation with local communities to establish shared sustainable water management systems. Water risk assessments are conducted regularly in each area to identify critical risks and develop appropriate risk reduction measures.
Climate-induced Migration and Labor Shortage
Risk Impact:
Climate change and intensifying environmental impacts are accelerating population displacement in many regions across the globe, particularly in areas at high risk of natural disasters such as floods, droughts and severe storms. These are among the key factors contributing to economic and social uncertainty and impacting labor supply chains and long-term economic stability. Climate-related migration poses direct impact on Charoen Pokphand Group’s operations, in terms of labor shortages in the production and service sectors, rising labor costs, and challenges in maintaining production efficiency and service quality. Moreover, the ability to expand operations in regions experiencing severe labor shortages may be compromised. In addition, rapid demographic changes due to migration can also place pressure on local societies and infrastructures where we operate.
Risk Management:
Charoen Pokphand Group has established a systematic approach to manage these risks by enhancing labor supply chain resilience, continuously developing workforce skills in operating areas, and promoting sustainable local employment in order to support future business expansion and respond to changing socio-economic conditions. The Group also integrates the concept of "Just Transition" into business adaptation processes by establishing support mechanisms for workers affected by changes in the labor market. This includes promoting opportunities for reskilling and upskilling to empower workers to adapt and pursue new forms of employment sustainably in the long run. The Group also focuses on building partnerships with educational institutions, vocational training organizations, and government agencies to improve workforce quality in areas facing labor shortage tendencies. Meanwhile, the Group supports community engagement in shaping fair and inclusive economic development strategies for each area.
Risk Management Culture
To enable Charoen Pokphand Group’s stable and sustainable growth amidst business uncertainties, the Group places importance in reinforcing a risk management culture across the organization
by establishing and implementing risk management policies and guidelines throughout the Group, reviewing risk management structure to define roles and responsibilities more clearly, communicating and offering trainings related to risks, and sharing knowledge in risk management. Additionally, C.P. Group has a robust internal audit process to ensure the strict implementation of its risk management program. This internal audit process regularly reviews and monitors compliance with established risk management policies, identifies areas for improvement, and ensures that corrective actions are taken promptly to mitigate any potential risks.
The Charoen Pokphand Group aims to ensure that all levels of employees are attentive to their daily tasks and are aware of the Group's risk management rules. The Group has thus incorporated risk management issues as one of the criteria for employee performance evaluations.
Risk Training
Charoen Pokphand Group regularly organizes risk training courses for executives and workers to instill precise understanding and application, hence preventing noncompliance with applicable government and Group laws, rules, and regulations.
1. Risk Control Effectiveness Course:
The course was designed for executives and department that are responsible for the risk management of business groups. It was aimed to create executive and employees’ understanding of risk control measures and be able to apply the guidelines and methods to monitor, measure, and assess the risk management measures of the business.
2. Risk Management Framework and Enterprise Risk Assessment:
The course was designed for various departments to create awareness of risk management and understanding of roles and responsibilities in governing enterprise risk management. The training program includes Risk Control Efficiency, organized for executives and departments in charge of business group risk management to create an understanding about risk control measures for executives and employees.