Risk Management
Our operating environment is constantly evolving. In order to remain competitive and ensure sustainable success, Dabur consciously identifies and assesses risks, and responds appropriately to them.
Our ability to create long-term value depends on how we manage and mitigate the impact of these risks and leverage emerging opportunities.
Risks are owned and managed by line management. Risk function facilitates the conversations and helps monitor the action plans. Critical risks are escalated through existing reporting lines.
The following chart represents our Risk Governance Structure.
Our Governance Structure
Risks for 2023-24
The following chart represents some of the key risks identified by us. We have devised and applied relevant mitigation strategies for each risk, depending on the gravity of impact and the likelihood of occurrence.
Critical Risks
| Type of Risk | Mitigation Strategies | Capitals Impacted |
| Regulatory Risk: The regulatory landscape around us is evolving rapidly. The changes in regulations and emerging regulations around corporate governance, tax laws, sourcing of materials, emissions, waste generation, storage and use of material or quality of finished goods, may have an impact on the business by way of limiting the business activities, increasing operating costs, or resulting in litigation or regulatory action. The new regulations that may have an impact on business include the Food Safety and Standards Authority of India's (FSSAI) regulations on high fat, sugar, and salt (HFSS) products. |
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| Inflation Risk: A spike in material costs can not only lead to an increase in our cost of production and the final price to consumer but would also have a multiplier effect by way of impacting consumption habits of consumers and squeeze on profit margins percentage. A number of economic factors, including international conflicts and market uncertainty, tend to have an impact on raw material and packing material prices. |
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| IT & Information Security: With increasing digitalization and data-driven operations, a Data Privacy Framework and Policy is required to cover various touchpoints where Personally Identifiable Information (PII) and Sensitive Personal Data (SPD) is collected within the organization across various touchpoints. Non-adherence to privacy-related clauses may attract liabilities. |
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Non-Critical Risks
| Type of Risk | Mitigation Strategies | Capitals Impacted |
| Supply Chain: Limited availability of critical raw materials for production, Single Vendor Sourcing creates vulnerability in the supply chain and even has a possibility of monopolistic pricing. Any issues or disruptions with the vendor can lead to supply shortages, delays, or quality concerns, loss of production. |
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| Counterfeit Products: The presence of counterfeit is high in the FMCG industry, causing significant losses to the companies and the Government. Not only are they a drain on the national exchequer, spurious products also lead to loss of consumer confidence in the brand as they can result in serious health and safety risks for consumers. |
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| Reputational Risk: A threat to the positive perception others have about our company, our products or services, or about us. It can lead to a number of negative consequences including Loss of current and potential customers; Loss of current and potential employees/talent; Loss of Revenue; Bad Will on behalf of the public; Additional scrutiny on behalf of government and/ or regulatory agencies; and Embarrassment/loss of face. |
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Business Continuity Plan
From our birth in a small pharmacy in the bylanes of Calcutta way back in 1884, Dabur has transformed itself to become a transnational FMCG enterprise today with a presence in more than 120 countries. Over the course of this 140-year-long journey, we have constantly reinvented ourselves to remain relevant to our ever-evolving consumer while keeping our Ayurvedic and Natural core intact.
Our agility and ability to change and adapt to meet these evolving needs ahead of others, coupled with our integrated approach to managing risks have been the key ingredients for our success. Our continued focus on enhancing our operational efficiency, building a robust ecosystem of supply chains, and strengthening our IT infrastructure has helped us to function with as few disruptions as possible. We also conduct Business Impact Analysis periodically to help identify risks, critical processes, and related dependencies. This enables us to find agile ways to make key moves early and then accelerate into new realities in times of crisis.
Physical climate-related hazards such as drought, flooding, etc. are modelled in our scenario analysis assessment for our physical assets as well as our agricultural supply chain. A robust Business Continuity Plan (BCP) has been put in place to cover all our manufacturing facilities, offices, and our Supply Chain.
Our strategy of setting up multi-phase and multi-location production facilities is a big part of this strategy as it enables us to use multiple plants alternatively to ensure seamless production activities even in unprecedented scenarios like plant shutdown or plant failure. Our robust ecosystem of supply chains that includes multiple chains of suppliers mitigates the risk of dependency on just a handful for the supply of key raw and packing materials. As a part of incident-responsive activities, we also focus on finding alternatives for all our key input ingredients.
Our Business Continuity Plan also highlights testing of the restoration plans of IT applications in case of a critical IT application disaster. Our management has completed testing action plans for almost all IT applications except a few.
The efficacy of the BCM plan is established through periodic business continuity testing.
Annual Report 2023-24