Risk Mitigation

About

It is imperative for businesses to prepare a comprehensive risk management framework that serves as a guide to overcoming any challenges it may encounter en route to achieving its vision and mission. The Plantex risk management committee was set up for this very purpose – it will study the risk landscape to identify factors that could derail our growth, formulate detailed plans for managing these obstacles, and oversee the implementation of these plans when problems arise.

Rising Material Costs

Increasing Competition

Legal Liabilities

Supply Chain Disruptions

Reputational Damage

Rising Material Costs

We require constant access to large amounts of soybeans, peas, nuts, and other plant- based raw materials to continue operating. However, procurement costs may rise if crop production is impacted by climate change, crop diseases, or any other natural disasters beyond our control.

Management

We favour sourcing raw materials directly from agricultural producers to minimise costs. We plan to diversify our supply chain to reduce our risk exposure: from this year onwards, we will onboard new suppliers from countries that are less exposed to climate change and natural disasters. Malaysian suppliers are particularly reliable as the country boasts a climate conducive to farming, resulting in abundant supply at relatively affordable prices year-round.
Of course, we will also invest in developing new production technologies that will enable us to increase output while lowering costs.

Increasing Competition

Competition in the plant-based market may intensify in the future as more new entrants compete for market share. In the event we are unable to retain our current competitive advantages, we may be forced to lower prices to continue attracting customers, with negative implications for our financial performance.

Management

Our strategy for retaining our dominant market position involves:

Enhancing Brand Visibility. We engage in marketing and outreach activities that improve consumers’ perception of our brand.
Product Diversification. We are continuously launching innovative new products that meet current consumer needs and incentivise them to remain loyal to our brand.
Maintaining Product Quality. Consumers naturally gravitate towards higher- quality products; as such, our high quality standards give us an advantage.
Forming Strategic Partnerships. Leveraging our business partners’ expertise and resources to improve operational efficiency and bring added value to customers.
Expanding Into New Markets. Overseas expansion prevents overreliance on a single market (i.e. Malaysia) and grants us access to more business opportunities.

Legal Liabilities

As an F&B business, we may be exposed to lawsuits, both civil and criminal, in the event consumers suffer allergic reactions or experience food poisoning after consuming our products. In such situations, we may be forced to stop selling our products and possibly suffer irreparable reputational damage as a result.

Consumer trust in our brand may also be impacted if we are accused of engaging in false advertising or illegally making use of other companies’ trademarks and intellectual property.

Management

We take food safety seriously and have implemented strict quality controls in accordance with international food safety standards to ensure no defective products ever leave our production facilities.
To avoid accusations of false advertising, our legal personnel review all promotional materials before distribution to make sure the content within complies with relevant regulations; similarly, they have familiarised themselves with intellectual property and copyright law to prevent inadvertent infringements.
As an added precaution, our legal team will regularly communicate with representatives of relevant oversight bodies to stay informed of the latest regulatory shifts and adapt accordingly.

Supply Chain Disruptions

Our supply chains span multiple countries and are vulnerable to disruptions stemming from a variety of unforeseen developments, such as extreme weather events and shipping delays. In the event of such disruptions, we may face rising costs or else fail to deliver customer orders on time, which would adversely impact sales and profitability.

Management

We are improving supply chain resilience via:

Selecting Reliable Suppliers. We assess prospective suppliers’ past performance before entering into any contracts; only the best performers are selected.
Supply Chain Diversification. We source raw materials from suppliers based in different locations.
Constant Monitoring. We constantly monitor each segment of the supply chain in order to detect and address arising problems at an early stage.
Building a Sustainable Supply Chain. Sustainable supply chains are naturally more resilient. We are studying supply chain management best practices from sustainability leaders worldwide and incorporating those into our business model.

Reputational Damage

A company may suffer reputational damage that negatively impacts its financial performance if it is perceived by consumers to have acted in a manner contrary to its professed values. For a plant-based business like Plantex, this would mean consumers believe we are not operating ethically and sustainably in accordance with the progressive values we claim to espouse. Given that one-third of consumers worldwide expressed a preference for sustainable brands in 2020 (as reported by Nielsen), it is vital for us to protect our reputation to avoid losing the support of our core customers.

Management

We uphold our reputation for sustainability by:

Initiating Corporate Social Responsibility Programmes. We will partner with various charitable organisations to administer corporate social responsibility programmes that uplift marginalised social groups. Each initiative will be recorded and publicised in a periodical sustainability report.
Establishing Transparent Communication Channels. We practice full information transparency, regularly updating shareholders and the public alike on our latest activities. When we receive customer feedback, we respond promptly and courteously, always acknowledging their concerns and striving to find a satisfactory solution to their problems.
Exercising Caution When Appointing Brand Ambassadors. Controversial statements from an official brand ambassador may reflect negatively upon a company, as shown when Adidas was forced to terminate a lucrative partnership with Kanye West following widespread reports of his antisemitic remarks, leading to US$540 million in losses. We have learnt from Adidas’s painful example and will exercise considerable caution when appointing a brand ambassador in the future, vetting candidates thoroughly beforehand to ensure their values and image align with ours.