risk may impact the Company and its subsidiaries’ revenue and/or capital at present and in the future. Reputational risk may arise from noncompliance with corporate governance and business ethics, or nonconformity to the laws, regulations, as well as the Company and its subsidiaries practice rules. The Company and its subsidiaries have continuously taken into account the importance of the reputational risk. The policy consists of reputational risk framework and reputational risk management processes which entail reputational risk assessment and measurement divided into 5 levels of impact and likelihood, reputational risk prevention by raising awareness and devising measures to prevent reputational risk events, regular monitoring and reporting to relevant committees, including risk management in case of high and very high risk levels. The Company and its subsidiaries set up a main working unit to be directly responsible for risk management processes. 8. Regulatory Risk The regulatory risk arises from incompliance to laws, regulation, requirements, standards, and guidelines in the Company and its subsidiaries transactions which can lead to financial loss, reputation damage, and interference by state entities. Also, there are risks from the amendments or changes in regulations, laws or requirements of the authorities especially the SEC, the SET, the OIC, the AMLO, the BOT, etc. Such changes may affect the strategies and business operations of the Company and its subsidiaries. The Compliance Unit of each member company of Thanachart Group is the department responsible for ensuring that the companies are incompliance with regulations and requirements from related various state agencies and the Code of Business Ethics. The department also provides advices and disseminates knowledge to executives and employees. Furthermore, it helps high-level executives to effectively manage risk of regulatory violation. The role and responsibilities do not overlap with the Internal Audit Department. As well, its specific responsibilities Among others, these included work related to participation in Thailand’s Private Sector Collective Action Coalition Against Corruption (CAC) and collaboration with the regulators or state agencies concerned. In this connection, related reports would be sent to the top management as well as the Audit Committee of each company in parallel. In evaluating regulatory risk, the Compl iance Department assesses incompliance risks in various transactions by considering all related internal and external factors for the Company. These include regulatory climate and outlook of the authorities, auditing assessment by the officials, business policies, debates and complaints, internal audit, and internal work procedures. The consideration is placed on the magnitudes of possible impact and likelihood of occurrence in each aspect of incompliance risks. Random review is executed to comply with Control and Monitor standard, and a recommendation is proposed to correct errors and improve performance. New Potential Risk Factors Risks Arising fromClimate Change and Environment Climate change has direct impacts on the risks arising from the environment in the form of various natural disasters such as floods, droughts, and famines. Meanwhile, there are also impacts from changes in greenhouse gas emission policies such as the Carbon Border Adjustment Mechanism (CBAM) announced by the EU, which will have impacts not only on the export sector which is the country’s economic driver but also on the use of more eco-friendly technologies. The Company and its subsidiaries support the country’s target of greenhouse gas emission reduction target of 20 - 25 percent (compared to the normal case) by 2030. In this connection, Thailand ratified its participation in the Paris Climate Accords whose goal was to keep the rise in mean global temperature to well below 2 °C in line with the United Nations’ Sustainable Development Goals. The Company and its subsidiaries also look for opportunities to develop investment products which promote society and environment. In this connection, efforts are made to corporate culture practices which promote energy conservation and environmental protection. Among others, these include replacing fluorescent lights with LED tubes in office buildings, reducing electricity consumption inside buildings, reducing use of split-type air conditioners and installing 71 56-1 One Report / Annual Report 2021 Thanachart Capital Publ ic Company Limited
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