Page 48 - HRC_Annual_Report_2023

46 About HRC Value Creation Management Discussion Leadership
& Analysis

RISKS & OPPORTUNITIES

COMPANY-RELATED RISKS AND OPPORTUNITIES
The Leadership Team and Board of Directors review HRC’s extensive risk assessment matrix quarterly via the Board Risk Management
Committee. This matrix covers all major risks and opportunities, allowing HRC to pinpoint and evaluate the Company’s risks and
establish preventive actions beforehand. This proactive approach guarantees our preparedness to manage any emerging risks.

Asset Integrity Risks - The oil refining sector is subject to
various inherent risks, including those tied to asset integrity,
process safety, and personnel safety. In response to these
challenges, HRC not only adopts and continuously enhances
best practices but also undertook a major Turnaround exercise
in 2023 (TA 2023) to further bolster asset integrity and ensure
operational efficiency.
Project Risks - Every HRC project is strategically
planned with measures to reduce technical, construction,
and operational interruption risks, incorporating assessments
for post-implementation risks as well. This was exemplified
in the execution of TA 2023, the preparation for which began
in 2022 as it required major internal planning and
coordination with various departments. Pre-assessment of risks
and mitigating responses ensured the smooth completion of
the project without any major product quality issues or safety
incidents. Ongoing evaluations are still being carried out to
manage any emerging risks post-completion.

Margin and Commercial Risks - As an independent
refinery, HRC faces volatility in oil refining margins and oil
prices. To mitigate these uncertainties, HRC has implemented
strategies to limit our vulnerability to sudden oil price shifts
through selective hedging against crude price fluctuations and, In response to the challenges posed by climate change,
refining margins. Additionally, to ensure ongoing operations what began as a task force has now evolved into a formalised
and sustainability, HRC has reduced reliance on any single client format under the sustainability governance structure that was
by expanding our customer base among various oil and gas established in 2023. Under this structure, the Sustainability
firms domestically and internationally over recent years. Steering Committee (represented by the Leadership Team)
Furthermore, recognising financial risks, HRC has also adopted provides strategic direction on aligning our initiatives with
measures to manage credit, liquidity, forex and market risks, the objective of achieving net zero carbon emissions by 2050
ensuring financial stability and resilience.
and have an oversight on matters related to ESG as well.
Climate Change & Other Environmental Risks - Supporting this Steering Committee is the Sustainable Working
We are committed to using resources and energy efficiently Group, which is tasked with implementing various initiatives
to reduce our environmental impact. Our internal policies related to sustainability and ESG. Broadly, the efforts include
support active management of our environmental footprint. initiatives to reduce HRC’s greenhouse gas emissions and
Moreover, HRC acknowledges climate change as a significant integrate sustainability into our business operations. Priorities for
risk that could affect our business. By identifying and FY2023 include advancing the Energy Masterplan and developing
evaluating related risks and opportunities, we aim to maintain strategies for further reduction of the carbon footprint.
long-term sustainability. Consequently, we have incorporated Cleaner Energy (opportunity) - HRC has observed an
“Climate Change from HRC businesses” into our comprehensive increasing demand for cleaner energy and a possible decline in
Risk and Opportunity Register for ongoing monitoring and risk the need for hydrocarbon-based transport fuels. In response,
mitigation, which is reviewed quarterly by Management and strategic planning has been directed towards exploring future
examined by the Board of Risk Management Committee and investment opportunities in petrochemicals and renewable
Board of Directors. Climate-related projects are evaluated by or alternative energy sources, supplementing our established
the Board Projects Review Committee.
foothold in the hydrocarbon products market.