Risk management

Risk is inherent to our business. Identifying and managing it is central to our success. It can take many forms and has the potential to have an impact on our safety and health, environmental, regulatory, market and financial performance as well as our reputation and community relationships. We use a Group-wide management framework to ensure the effective governance of our material risks – those with the potential to impact on the achievement of our sustainability commitments or strategic plans. We exercise due diligence prior to the introduction of new practices, processes and products.

Our Sustainable Development Management Standard covering risk and change management, sets out the ways in which sustainable development risks are to be managed within the Group, while our sustainable development risk register is updated every 12 months to ensure that action plans are in place to mitigate all risks with a high impact potential and likelihood. The profile covers inherent operational risks and strategic risks such as climate change and failures in our governance procedures. It is reviewed at least once a year by our DLC sustainable development committee. We have prioritised the information reported this year to reflect our current exposure to specific risks.

Material sustainability risk issues identified in 2010

The risk table below is divided into two sections. Section one highlights the key impacts that we have on sustainability and on our stakeholders. Section two focuses on the sustainability trends, risks and opportunities that affect our long-term prospects and financial performance.

Management policies, systems and processes for sustainability

Key impacts on sustainability and our stakeholders
Potential risk	Mitigation strategy	Control strategy
Employee/contractor safety and health
High inherent risk of fatality, serious injury, illness, disease and substance abuse	Visible management commitment to ‘zero harm’ in the workplace – safety is a value and has the same priority as other business objectives Up-to-date register of significant safety risks Mandatory Group management system and performance standards and requirements Aim to be the safest company in sector	Application of safety management system provides clear guidelines to promote ‘zero harm’ Define and observe safe practice and behaviour prominent in procedures, rules and practices Performance standards effectively communicated, widely understood and part of daily life Work within externally accredited safety management systems such as OHSAS 18001 Benchmark practices against international industry best practice
Process safety
High inherent risk of catastrophic failure of plant and equipment	Clear standards, a regular review of our hazard analysis and a risk register of significant process safety risks Mandatory Group management system and performance standards and requirements including the safety manual for kraft recovery boiler plant operation	Implementation of safe practice performance requirements through procedures and practices Safety manual for kraft recovery boiler plant operation Inspections, assessments, first, second and third party audits, assurance reports and improvement plans Regular audits of plant and equipment standards Emergency preparedness and crisis management planning Rehearsal and drill of local emergency plans and arrangements
Combustible materials
High inherent risk of fire due to combustible inventories at operations and in forestry	Management of fire risks according to regulatory standards Regular third-party loss prevention programme (asset value > €5 million)	Implementation of human factor and external loss prevention audits Development and implementation of standarised protection standards Emergency preparedness and crisis management planning Rehearsal and drill of local emergency plans and arrangements Provision of a dedicated fire safety resource and modernised fire fighting capabilities
Change in South African harvesting practices - mechanisation of plantation forestry
High inherent risk due to public perception of the change/ loss of rural support and due to chronic ill-health of current contractor workforce	Change from manual to mechanical harvesting in a socially responsible manner In-sourcing of forestry contracting Forestry development through contracting	Provision of meals for contractors (Food 4 Forests programme) to reduce absenteeism and injuries due to lack of concentration and physical endurance Mkhondo development programme offers access to economic opportunities and social services Mondi Zimele enterprise development programme
Land claims in South Africa
Continued inherent moderate risk of loss of fibre supply from land claims in South Africa	Continue working constructively with government and communities to develop claimant communities into sustainable forestry enterprises	Continuation of working constructively with government and communities to develop claimant communities into sustainable forestry enterprises
Environmental impact from loss of containment
Moderate inherent riskdue to loss of containment in pulp manufacturing	Up-to-date register of significant environmental risks Mandatory Group management system and performance standards and requirements that are based on recognised good industry practice	Implementation of procedure and practices that are based on recognised good international industry practice Inspections, assessments, audits, assurance reports and improvement plans ISO 14001 certifications Frequent review of Best Available Techniques concepts and related emission level values Programme of assessments of past disposal activities
Public health claims in South Africa
Moderate inherent health risks owing to health effects from plant emissionson surrounding communities	Nuisance reduction programme Active issue management addressing specific allegations and regular communication with stakeholders	Regular communication with government bodies and other stakeholders First phase of odour reduction project in Richards Bay (as a nuisance reduction measure)
Risks and opportunities from sustainability trends
Unsustainable forestry practices
High inherent risk of loss of access to credible resources due to loss of certification	Internationally credible certifications Chain-of-custody certifications for operations Compliance with FSC^TM’s Controlled Wood Standard	Sustainable forestry management practices and sustainable forestry procedures Third-party certification to FSC^TM standards (where possible) Chain-of-custody certifications for operations Participation in international forestry dialogues
Climate change footprint
Moderate inherent risk as fossil fuel emissions reduce at a slower pace	Utilisation of biomass to produce primary energy Carbon footprint reduction Participation in carbon disclosure benchmarking	Reduction of specific greenhouse gas emissions by 23%, against a 2004 base year Aim to increase share of biomass in energy generation Provision of product carbon footprint information Participation in Carbon Disclosure Project

Last change: 15.03.2011