Risk Management
Mapping diligently. Safeuarding effectively.

Identifying and managing risk is critical to our business for a sustainable future. In addition, an integrated risk management framework ensures the effective governance of operational and strategic risks. We define risks as situations or actions with the potential to threaten our ability to deliver on our strategic priorities and, ultimately, to create sustainable value.

We have institutionalised a robust and comprehensive risk management framework which also forms a part of our governance architecture. The risk management framework, based on our Group Risk Management process, is based on international standards like the Committee of Sponsoring Organization of the Treadway Commission (‘COSO’) and ISO 31000, and is aligned with our strategic planning and capital project evaluation process. The risk identification and treatment process involves a two-tier mechanism with bottom-up and top-down approach.

In the bottom-up process, process-level critical risks are identified for mitigation by each function. Risks impacting more than one key processes and/or having high impact on profitability/continuity are recognised as enterprise-level risk in the top-down or Enterprise Risk Management (ERM) process. Risks are prioritised based on severity of impact and likelihood of occurrence using a customised rating scale. Risk treatment plans, based on cost-benefit analysis and following the principles of acceptance, avoidance, transfer and mitigation, are adopted for all critical (class A) and moderate (class B) risks, whereas contingency plans are put in place for low (class C) risks. Acceptance is an intelligent risk taking mechanism to leverage upon emerging opportunities.

Type of Risk Summary Mitigation Plans Capitals impacted
Financial

TML, being net importer, is exposed to currency volatility. This could adversely affect our profitability and disrupt business continuity if not handled properly.

  • Healthy cash flow generation
  • Strong hedging policy
Regulatory

Our operations are heavily impacted by ever changing regulatory framework, in particular environmental regulations. Non-compliance to the same may adversely impact reputation.

  • Actively tracking the regulatory landscape
  • Technology-enabled mechanism to track compliance, awareness, timelines with suitable escalations, action plans and reviews
  • Practice zero tolerance to non-compliance
Climate change

Emerging risk from climate change due to progress in climate change regulations and disclosure standards could reduce access to capital and increase the cost of funding.

  • Long-term plans for consistent reduction in our carbon footprint
  • Usage of alternate fuels in blast furnaces (natural gas, hydrogen, biomass etc.)
  • Increase usage of renewable energy for example, solar power
  • Use of Carbon Capture Technologies
Macroeconomic and market

Foundry grade PI is a commodity product, used as raw material by casting industry. DI Pipe is an end product used for building up water transmission infrastructure. Demand for both PI and DI pipe is affected by demand supply imbalance due to capacity addition and substitution by alternate products.

  • Building a strong GTM strategy that combines brand building (TATA eFee and TATA Ductura), partnering with dealers in focused markets, technical services, CSR activities at customers’ premises and use of digital technologies for CRM management to become customer’s first choice, earn premium over competition and retain customer loyalty
Operational

Interruption in TML plant operations may be caused by various uncertainties such as machinery failures, natural disasters, epidemics or pandemics, dependency on outsourced vendors, who are responsible for running a few critical operations. Any of these instances could negatively affect operations.

  • Usage of analytics and predictive maintenance technology to improve plant availability and reliability
  • Improvement in process efficiencies by digital intervention
  • Creation of disaster recovery plan and related SOPs to proactively respond to natural disasters, epidemics
  • Community welfare initiatives to encourage industrial harmony and business continuity plan to mitigate disruption of outsourced operations
Safety

Our operations and business continuity depends on consistent adherence to process and workforce safety requirements, safety laws and regulations. This poses a risk not only to workforce health & safety, but also reputation of Company.

  • We are actively committed to zero harm via policies and initiatives
  • Encourage experiential learning and focus on awareness of safety standards among workers and employees
  • Campaigns on various safety topics
  • Created a multi-layer protection mechanism that will break the transmission of COVID-19 at our workplaces
Community

A loss of confidence with communities will hurt our effort to make widespread societal impact and lead to consequent loss of reputation or business continuity.

  • Create deep societal development based on a portfolio of programmes and platforms
  • CSR initiatives are focused on 3 enablers
  • education, employability and essential amenities (Water)
Commodity

Input costs are significantly impacted by volatility in raw materials, geopolitical events, pandemic or changing weather could affect commodity prices.

  • Decrease dependence on a single source and diversify supply sources across geography
  • Development of captive/indigenous raw materials to safeguard against volatility and supply chain disruption
Supply chain

Climate disruptions, political instability and local restrictive regulations coupled with intermittent waves of pandemic is a threat to supply of critical material.

  • Development of alternate materials and/ or supply sources for proprietary items and single source items (country, supplier)
Information security

Institutional changes of working models to remote/work from home and accelerated adoption of digital technologies has made us more vulnerable to cyber-attacks and information safety.

  • Budget allocated and invested in digital transformation such as multi-layered network topology
  • Adoption of next-generation Security Operations Centre (SOC) controls and technologies for IT security
  • Partnered with well-regarded and best-in-class service provider for SOC services
  • Legacy systems are being replaced by newer and efficient systems.