Seek opportunities while addressing risks

Following adequate caution and curiosity towards risk and opportunity identification, our strategy is to focus on issues which are most relevant to our business and the areas where these issues impact the most. This assessment helps in identifying the low hanging fruits and guides in developing long term goal planning. The assessment is based on an exhaustive internal and external stakeholder interaction that helps us assess our overall risk exposure and supports the strategic decision-making process. Our steps toward implementing risk-mitigation action plans include assessment of risks/opportunities in terms of importance to our stakeholders and to the Company. These risks/opportunities are then prioritized and action plans formulated in the form of projects. We have also identified specific risks and opportunities in alignment with our Vision and Mission on people, operations and sustainability.

• People – We continue to strengthen and energize ‘We Care’ through ‘More Boots On Ground’, which focuses on organization, people engagement and specific deliverables
• Operations – Since our operations are highly dependent on natural resources and energy, we need to ensure supply security at optimum cost and quality
• Sustainability – Our constant endeavor to explore opportunities for sustainability and prosperity in a business environment that is evolving dynamically to live our guiding philosophy of ‘I CAN’

The Company has always been adaptive to various national and international guidelines (mandatory and voluntary) to assess our sustainability performance and identify risks and opportunities arising from the sustainability challenges

We have a comprehensive Business Risk Management (BRM) Policy that defines two types of risks: corporate risks, covering the macro environment, legal matters and regulations, financial considerations, business support, planning and image; and business segment risks, which focus on cement industry-specific areas such as the market, projects, CSR, HR, sustainable environment performance, Better Cost Management (BCM), Product Management and Innovation (PMI), etc. The Board of the Company is responsible for framing, implementing and monitoring the risk management plan. The Risk Management Committee of the Board lays down the procedures to inform the Board about identification, assessment, monitoring and mitigation of various risks faced by the business. Risk management forms an integral part of the Company’s Mid-Term Planning (MTP) cycle. The charter and responsibilities of the committee at the Board level are clearly described in this Annual Report.

The BRM process identifies risks and opportunities at the corporate as well as operational levels, considering social, economic and environmental risks to help improve awareness and management of the Company's risk exposure. Our Risk Assessment and Management Policy supports a sustainable business model for increased profitability by integrating risk mitigation into business strategies. Management is provided with relevant data to identify emerging issues. It allows us to consider emerging risk areas and look for opportunities presented by risks that are not always quantified by other analytical and systems-driven approaches. Emerging sustainability issues in our industry include climate change, social inclusion, depletion of non-renewable resources, brand damage (including boycotts), shareholder actions related to sustainability issues and disclosure of historic environmental liabilities. Our holistic approach helped us in sound management of financial, non-financial, and sustainability-related risks associated with our operations. We address many aspects of sustainability, improving business efficiency and ultimately boosting profits. Efficient productivity implies reducing material requirements and energy for production, lowering emissions, improving recyclability, improving the durability and reliability of products, and maximizing the use of renewable resources.

The Board reviews the performance updates of the Company, business strategies, internal controls, health and safety, sustainable development, risks involved and the mitigation plans regularly. Quarterly updates are provided to the Board on performance against non-financial KPIs and major sustainability initiatives / achievements.

We are confident that our steps on incorporating integrated operating model throughout Ambuja Cements will lead to a big leap towards effective and integrated sustainable development structure of our business that also impacts the environment and the community in the desired, positive way. To ensure this, the variable compensation of the MD & CEO has been linked not only to KRAs pertaining to internal financial success metrics (such as cash flows, EBIT, revenues, etc.) but also consider external financial success metrics (such as perception metrics, environmental metrics, social figures, etc.). While 85% of the MD & CEO’s variable compensation is determined by the financial performance of the company, 15% depends on the non-financial performance including health and safety. The Independent Directors undergo a familiarization program on the cement industry scenario, the socio-economic environment in which we operate, our business model and our operational and financial performance. In addition, they are also apprised on non-financial aspects that are relevant to the company.