In the framework of the Enterprise Risk Management Policy, risk assessments are prepared by Business Units, Service Units, Corporate Functions and Regions to assess threats that will impact the achievement of the objectives set for Clariant overall. These objectives are a result of the overall strategy of the Group as set by the Board of Directors and implemented by the Executive Committee.

The Executive Committee is responsible for monitoring the risk assessments for relevance and consistency. The Executive Committee has formed an »Ethics and Risk Management« subcommittee, which maintains an up-to-date understanding of areas where Clariant is, or may be, exposed to risk issues, and seeks to ensure that management is effectively addressing those issues. The Ethics and Risk Management Committee meets on a quarterly basis.

The short- and long-term objectives are set in the fourth quarter of the year. These objectives and threats are subject to scrutiny by the Executive Committee during meetings with each Business Unit.

Also reviewed and discussed are proposed measures to reduce or contain threats. In that context responsibilities are assigned.

All stakeholders are required to report significant changes to existing identified risks and new threats as they arise.

Risk registers are maintained using financial and reputational impact and probability assessments to score and rank all identified risks.

The assessment also addresses the measures in place to manage the risk identified with dates for completion of the measures.

When threats have been identified and quantified, they are delegated to qualified individuals who are required to deliver effective risk management. Depending on the nature of the risk identified, specific skill sets may be required for the management of those particular risks.

A summary risk assessment is submitted annually to the Executive Committee, the Audit Committee and the Board of Directors for review.

In case of new or changed risks, reporting is accelerated.

To support functional responsibility, certain functions have access to risk assessments to assist them in their roles.

Examples of such functions are Environmental Safety & Health Affairs (ESHA) to identify key sites for their property risk survey program or Group Procurement to ensure reliable and compliant supply of raw materials.

Examples of identified risks included in the risk register:

2.1 – Regulation & Compliance:

Clariant is subject to many rules and regulations as well as compliance standards. These include chemical industry, country, government and customer requirements as well as the European Union’s (EU) Regulations on Registration, Evaluation, Authorization, and Restriction of Chemicals (REACH) or similar regulations in other countries.

The function Global Product Stewardship is responsible to ensure that all relevant legal requirements are met. Certain specific matters are delegated to other functions.

2.2 – Sites and locations

This includes manufacturing plants and equipment important for the production of Clariant products for sale to customers.

Also addressed are country and culture issues that could create threats to business objectives. The aim is to maintain high-quality and safe production facilities. ESHA and Regional Services are responsible for the management of the associated risks.

2.3 – Economic development

The achievement of corporate targets depends on economic development, which is continuously monitored in all markets. Economic uncertainty has increased and the growth of global economy could be lower than expected due to the pandemic and supply chain disruptions. Clariant is responding to the adverse economic environment with various performance programs addressing both cost and revenues.

2.4 – Sustainability transformation

Demand for sustainable products is clearly increasing which opens business opportunities. Non-availability of sustainable offerings represents a market disadvantage. Clariant is responding with the new organizational Unit Group Innovation & Sustainability which combines various resources to accelerate the sustainability transformation.

2.5 – Digital interconnection

Successful performance of the Clariant Group depends on properly working information systems. Cyber attacks may result in the loss of business and personal data, knowledge, facilities, or money, leading to interruptions in manufacturing and product deliveries. Such attacks might cause significant economic damages as well as loss of trust. Clariant is responding to the increased cyber risk with a reinforced security operations center, state-of-the-art software and frequent awareness campaigns.