Sustainability | Risk management

 

Risk management

Like any company we navigate through a complex and dynamic environment which presents latent threats and potential risks for the continuity of the operation that is based on the permanent identification of social, economic, political, environmental and commercial situations that surround each locality in which we are present, and to act immediately to mitigate these risks.

Risk management is at the heart of our strategy: to identify, assess and mitigate the risks to which we are exposed by the nature of our operation, as well as long-term protection and value creation.

For this reason, we have developed a Strategic Resilience Model, a tool that feeds on all the alerts and information that each of our employees identifies on a day-to-day basis.

Risk

Our strategic resilience model is based on ISO 310002, which seeks to ensure business continuity through better risk and crisis management plans from a more predictive and less reactive perspective and operation. Through this model, we transform business threats into opportunities to create a competitive advantage of value creation.

Arca Continental's risk management model is based on three management approaches that help us deal with both internal and external events, threats, and risks to protect the continuity and heritage of the business and generate competitive advantages by creating value and reputation for the business.

The transversal basis of the entire model are the processes in Comprehensive Risk Management that comprise the methodology and management tools, which together with the support of Public Affairs, Communication and Sustainability are essential to transform the regulatory and reputational threats of the business into opportunities to create a competitive advantage.

Early risk mitigation: Methodology and management of incidents and/or risks already materialized into crisis in order to minimize the reputational impact on brands, business, as well as the financial or operational impact thereof.

Comprehensive risk management: Based on a predictive approach, this transformation line seeks to bring the taxonomy of risks to each of the business ecosystems, map the ways in which these risks are materialized and prioritize them

Crisis management: As the name suggests, this line of transformation seeks to preventively mitigate the risks mapped and prioritized in their probability and financial and reputational impact on the business

With this model we elevate the importance of preventive risk management, the strengthening of reputation, and the promotion of sustainable performance, which together allows us to proactively meet the expectations of stakeholders.

Risk Governance

To integrate the processes in risk management, the participation of the corporate is necessary, where we have the intervention of the Executive and Functional Directors, the Risk Management team and the participation of the business units where we have the participation of Country Directors and Public Affairs, Process and Audit Leaders.

The process of comprehensive risk management considers the integral collaboration between departments and business units, considering roles and responsibilities at the levels and the use of standardized methodology for the identification and prioritization of risks, focused on the preventive mitigation of risks and business continuity.

ESG Risks in Critical Suppliers

We evaluate the sustainability performance of our critical suppliers, who account for the top 80% of global spending for our highest priority ingredients by volume. To provide greater understanding and transparency of our ingredient supply chain, we include a list of critical suppliers in our annual report to the Mexican Stock Exchange.

Sustainability performance evaluations of our critical suppliers allow us to identify risks in our supply chain and develop corrective plans for those suppliers that present a high level of risk in any of the topics shown in the table below.

Water-related risks

Since water is a strategically relevant raw material to our operations and a vital element to the subsistence of our society, significant efforts have been made to understand the sources of risk that could impact the supply of this resource for the company and the society.

Risk Culture

Improving business reputation and business growth through risk management, sustainability, and public affairs initiatives is a strategic priority for the organization.

For this reason, we align risk management with our strategic objectives through a continuous improvement approach. This approach allows our employees to analyze, detect and address areas of improvement at different stages of our processes and throughout our supply chain.