To deliver value to our customers, employees, communities and shareholders, we must understand and manage the impacts, risks and opportunities faced across our entire enterprise. We use a number of tools to identify and prioritize risks and opportunities, including a sustainability materiality assessment, a stakeholder engagement process and our Enterprise Risk Management process. Risk management is a strategic activity within Dow, and our ability to manage risk creates opportunity as well. Corporate-level identification and management of risk is systematically accomplished using an integrated Enterprise Risk Management approach. Risk management results are regularly communicated to management.
The Board is responsible for overseeing the overall risk management process for the company, including review and approval of the enterprise risk management model and process implemented by management to identify, assess, manage and mitigate risk. Risk management is considered a strategic priority within the company, and responsibility for managing risk rests with executive management, while the Committees and the Board as a whole oversee the process.
The oversight responsibility of the Board and Committees is enabled by an enterprise risk management model and process implemented by management that is designed to identify, assess, manage and mitigate risks. The Audit Committee is responsible for overseeing that management implements and follows this risk management process and for coordinating the outcome of reviews by the other Committees in their respective risk areas.
Although each Committee is responsible for overseeing the management of certain risks as described above, the full Board is regularly informed by the Committees about these risks. This enables the Board and the Committees to coordinate risk oversight and the relationships among the various risks faced by the company. See Committee Responsibilities and Risk Oversights here.
The company establishes guidelines and policies that enable it to mitigate the adverse effects of risk. Risk factors that have been determined to be financially material to the company and related to ESG include:
A public health crisis or global outbreak of disease, including the pandemic caused by coronavirus disease 2019 (COVID-19) has had, and could continue to have, a negative effect on the company’s manufacturing operations, supply chain and workforce, creating business disruptions that could continue to have a substantial negative impact on the company’s results of operations, financial condition and cash flows.
Increased concerns regarding the safe use of chemicals and plastics in commerce and their potential impact on the environment have resulted in more restrictive regulations and could lead to new regulations.
The company operates in a global, competitive environment, which gives rise to operating- and market-risk exposure.
A significant operational event could negatively impact the company’s results of operations.
The costs of complying with evolving regulatory requirements could negatively impact the company’s financial results. Actual or alleged violations of environmental laws or permit requirements could result in restriction or prohibitions on plant operations, substantial civil or criminal sanctions, as well as the assessment of strict liability and/or joint and several liability.
Increased concerns regarding plastic waste in the environment, consumers selectively reducing their consumption of plastic products due to recycling concerns, or new or more restrictive regulations and rules related to plastic waste could reduce demand for the company’s plastic products and could negatively impact the company’s financial results.
Availability of purchased feedstock and energy, and the volatility of these costs, impact Dow’s operating costs and add variability to earnings.
The risk of loss of the company’s intellectual property, trade secrets or other sensitive business information, or disruption of operations could negatively impact the company’s financial results.
We use a number of tools to identify and prioritize risks and opportunities, including a sustainability materiality assessment, a stakeholder engagement process and our Enterprise Risk Management process. Risk management is a strategic activity within Dow, and our ability to manage risk creates opportunity as well. Corporate-level identification and management of risk is systematically accomplished using an integrated Enterprise Risk Management approach. A complete statement of risk factors can be found on page 19 of the 2020 Form 10-K, filed with the SEC on February 5, 2021.
~ This symbol indicates that information at this link was not subject to Deloitte & Touche LLP’s review and; accordingly, Deloitte & Touche LLP does not express a conclusion or any form of assurance on such information. The audited financial statements included in the 2020 Form 10-K and 2020 Annual Report were audited by Deloitte & Touche LLP and its audit report, dated February 5, 2021, is included therein.