Physical Risk

Throughout the year, an array of climate change induced weather events was experienced around the globe and in India too. These calamities included extreme weather events like intense heatwaves, cyclones, erratic rainfall, floods, and others, affecting almost every region of the country and causing unprecedented levels of destruction. Having a wide geographical spread, the organisation is susceptible to such erratic weather phenomenon which could cause disruptions in its operations and supply chains, in addition to causing negative impact on the wellbeing of our people and our assets.

Additionally, long term changes in climate patterns causing rising temperatures and sea levels may also expose our operations to future impacts of worsening climate change, which can impact our business continuity in certain vulnerable regions.

Risk Response

Reliance has robust business continuity management plans to manage risks arising from the physical impacts of climate change events. Each business segment after thorough evaluation of risks and its impact, develops these plans to ensure uninterrupted availability or swift recovery of essential business processes, resources and operations. Regular review and testing are undertaken to ensure the effectiveness

The Global Corporate Security (GCS) team focuses on adopting pre-emptive, de-risking strategies to safeguard and secure operations from disasters, natural calamities, and any other disruptions or incidents at RIL. Digital Services has established an integrated process for Disaster Recovery and Emergency Response to ensure network functionality and uninterrupted customer services. Retail has also developed comprehensive plans for disaster recovery and incident response to guarantee business continuity during any potential disruptions or incidents.

Transition Risk

Risks Related to Policies, Law and Regulations

Driven by ongoing geopolitical tensions and the urgency to act on climate change, a new global energy order is emerging - leading to a shift in the way energy is produced and consumed. This gradual move away from fossil fuels is prompting an increased focus on developing policies, incentives and regulatory frameworks that can bolster the adoption of low-carbon technologies and green products - which may impact the demand for RIL’s current products. Additionally, the envisaged development of a domestic carbon market regime and thereby the likely introduction of stricter regulations related to GHG emissions may impact RIL’s operating costs.

Risk Response

Reliance continues to focus on energy management and resource optimisation to reduce its carbon footprint through adoption of data analytics, advanced process controls and optimisation models. It is proactively shifting its dependence on fossil fuels to renewable alternatives like solar, biomass etc. to meet its captive energy demand. The Company also has plans to establish 20 GW of solar energy generation capacity by 2025, which will be consumed for captive round-theclock (RTC) power and will also serve as intermittent energy for Green Hydrogen production.

Reliance is committed to scaling up responsible consumption practices and maximising circularity across its value chain through sustained investments in R&D of innovative technologies and solutions. By keeping resources in use for longer, our circular business models can help to reduce the demand for new raw materials and the associated carbon emissions from their extraction, transportation and processing. These initiatives are enabling us to minimise our impact on the environment and thereby mitigate the regulatory risks that may arise from a high carbon liability.

Market Risk

With the increasing number of customers embracing clean energy and materials, the demand for conventional products is likely to reduce, which may potentially impact the company’s revenue and profits.

Risk Response

The Company has integrated climate-related issues into its strategic planning, investment reviews, risk management processes, and long-range supply and demand forecasts. As reflected in its adoption of a long-term perspective on the transition to green energy, Reliance has set a bold and forward-looking vision to establish itself as a leading global player in the New Energy and New Materials industry. The company’s 15-year plan entails a multi-pronged approach to creating sustainable energy sources and futuristic materials for India’s future, while advancing the development of cutting-edge technologies to convert CO₂ emissions into useful products, use CO₂ as feedstock and develop next-gen carbon capture and storage technologies, in line with its focus on sustainability and innovation

With a plan to invest around `75,000 crore over a span of 3 years, Reliance aims to:

• Establish and enable 100 GW of solar energy by 2030.
• Build five Giga factories namely the integrated solar photovoltaic module factory, an advanced energy storage battery factory, an electrolyser factory, a fuel cell factory, and a power electronics factory, thereby creating an integrated, end-to-end renewable energy ecosystem.
• Partner with leading companies globally in Solar, Battery, and Electrolyser space.
• Focus on bioenergy, offshore wind, and other non-conventional sources.
• Maximise crude to chemicals integration and create a portfolio of advanced and speciality materials.
• Transform RIL’s business into Net Carbon Zero operations.

Once proven at scale, RIL is prepared to double the investment to scale up its manufacturing ecosystem.

In addition, Reliance is also engaging in R&D initiatives and taking concrete measures to enable transformation in its value chain. For instance, RIL along with Ashok Leyland developed this unique technology of India’s first Hydrogen Internal Combustion Engine (H2-ICE) powered heavy duty truck.

Through these strategic initiatives, RIL aims to not only mitigate the negative impacts of climate change, but also position itself as a reputable leader in green energy business. The company’s green energy transition underscores its commitment to address evolving customer demands for a sustainable future, as well as its dedication to responsible corporate citizenship.

Technology Risks

As Reliance is shifting to explore newer business avenues in cleaner technologies, there are inherent risks and costs for scaling up novel technologies to their full potential.

Risk Response

Reliance is leveraging the expertise and experience of its New Energy Council (NEC), a group of leading global technocrats and thought leaders, to accelerate its transition to clean energy. NEC is enabling creation of a strong foundation to realise our vision of New Energy business – its strategic advice on innovative technologies and partnerships will help us mitigate the risks posed in these novel areas.

Reputational Risk

Growing concerns about climate change and increased momentum towards Net Carbon Zero could result in higher expectations from society and investors to address the environmental impact. Failure to meet these expectations could lead to damage to the company’s reputation, which could impact RIL’s ability to access capital, as well as to attract and retain talent.

Risk Response

Reliance is closely monitoring the progress of its Net Carbon Zero by 2035 target including realisation of its near-term targets. We have set interim timelines for significant milestones across various initiatives within the New Energy business. A dedicated ESG committee has been instituted at the group level to facilitate supervision over the implementation and review of crucial initiatives, with the aim of ensuring progress towards the attainment of our Net Carbon Zero goals.

Further, the company recognises the significance of effective stakeholder engagement, particularly in relation to its climate change goals and believes that ongoing dialogue with its stakeholders is essential to ensure alignment with the company’s objectives for a sustainable future.

With focus on research and technological innovation, strong fundamentals and deep understanding and knowledge of chemistry and materials that adds to our competitive edge. Reliance is well positioned to manage, risks while creating opportunities in the coming decades.

Risk Response

RIL’s strategy has been to source feedstocks from diverse sources to ensure supply security. Accordingly, RIL has long term contracts with various Middle East National Oil Companies, African and Latin American countries. It has also entered into term contracts with Canadian companies to source heavy crude oil.

Reliance has a robust ship tanker fleet, which is suitable to trade worldwide. This set of time charter ships was optimally and proactively utilised along with ships from the spot markets achieving smooth and timely cargo evacuation and by limiting exposure to freight cost.

The liquid tanker shipping markets has never seen such demand before. The challenge was to find suitable ships at commercially viable cost. This was managed by tight monitoring of the time charter ships multiple scheduling until the last minute for the best and optimum route for the time charter ships, while ensuring nil downtime (100% utilisation) basis ship and cargo availability and at the same time fulfilling the contractual commitment to the customers.

Minute planning and close coordination between the teams of Business, Operations and Chartering achieved this complex task.

Reliance Retail undertakes a detailed analysis of the macro-economic situation and proactively maintains and tracks market intelligence on geopolitical/economic policies shaping up in the global market. Continuous interactions and engagement with different stakeholders like brokers, traders and monitoring commodity exchange trades gives business the right impetus to carefully plan and de-risk itself against the external factors. We have internal controls and processes to ensure we procure optimum quantities at competitive prices in the market and also have wide base of vendors across geographies for each of the goods we procure.

Risk Response

For sustained customer experience at Digital business, following measures are adopted:

• Superior usage and billing experience
• Anytime, anywhere mobile and wireline broadband network access
• Best-in-class customer service backed by technologies like AI, Bots and app based QRC (Query Resolution Complaints) process
• Competitive tariff pricing
• Agile service model adopted to develop systems and platforms
• Enhancing customer experience with localised support
• Structured process of measuring Customer Satisfaction (CSAT) across all touchpoints.

Customer engagement remains robust with strong gross additions of subscribers, significant increase in net MNP subscribers and increase in per capita data usage. The Company has also invested in newer technologies start-up’s such as AI / ML, Blockchain, BoT, Speech / NLP, Metaverse, Mobility & 5G network, Robotics, Cloud & Edge computing etc. Use of these technologies will further enhance customer experience and value proposition.

Reliance Retail remains abreast on the trends in consumer preferences taking place in Indian and global markets. Its deep consumer understanding helps in designing and developing trendy and relevant products to cater to the dynamic needs of its consumers.

Reliance Retail is consumer centric organisation and has adopted a stringent policy of taking cognisance of ‘CUSTOMER SAFETY’ as topmost value and priority. Rigorous quality checks and all safety norms are adhered to at all times.

On the customer complaints front, the business has placed a dedicated ‘Customer Service’ team that handles all queries routed through emails, voice calls, chats, social media etc. This has ensured faster resolutions and enabled retention of our end consumers.

Ensuring timely deliveries, quality assurance, efficient logistic solutions, pricing options, etc. at competitive prices reduce the risk of customer loss in oil to chemicals business. Diversified customer profile across various geographical regions provides alternative markets for our products thereby reducing risks arising from sanctions.

Risk Response

Aligning investee companies in a structured manner to the group has been high priority for Reliance. We focus on strong governance processes and internal controls including integrating the financial systems and operational processes. The investee companies are brought under the Reliance Risk Management Framework, which provides a holistic view to formulate Annual Operating Plans that integrates across various businesses and functions.

Risk Response

Reliance has always adopted a forward-looking approach and has always treated its people with equal opportunities, thereby taking care of its people needs and retaining them by providing them fast paced growth opportunities.

Constant training and skilling initiatives along with a rigorous development regime empowers our businesses to have the right set of people at the right place and at the right time.

Focus to continuously build a strong talent pipeline by having an elaborate succession planning from critical roles to leadership roles is already in place and the business is well positioned to meet all its people demands in the near future.

Risk Response

Reliance recognises the importance of Data privacy and safeguarding personal data is one of the top priorities at Reliance. Data privacy principles are followed across the lifecycle of personal data to address data privacy risks.

Reliance ensures all its business processes follow the privacy-by-design and privacy-by-default approach and makes sure that the personal data is used ethically and legally. Adequate control measures are implemented for the protection of the personal data of individuals collected, processed, and stored by RIL.

Data Privacy processes are formalised across all businesses. Data Privacy Impact Assessments are conducted for all business processes that are involved in handling data. Transfer or sharing of personal data is controlled through Personal Data sharing processes. Data Privacy Awareness and training are conducted periodically to make users aware of best practices while handling individual’s personal data.

Reliance always strives to stay ahead of the compliance curve. Although compliance with the existing laws and regulations is demonstrated, global best practices are being adopted to comply with laws applicable to any jurisdiction or geography in which we operate going forward.

Risk Response

Reliance has adopted an approach of being proactive and at the same time being resilient to manage cyber risk. The Cyber Security strategy defined at Reliance is based on Mark to Threat and is aligned to business as well as technology.

Security by design principle and shift left strategy is followed across the lifecycle of the digital platforms to ensure that cyber security controls are part of the design. The cyber-attack surface is continuously monitored to identify vulnerabilities or misconfigurations and identified weaknesses are fixed on priority.

Contemporary and state-of-the-art security technologies and processes are deployed for protection against emerging attacks at multiple layers. Intelligence-driven Cyber Defense operations are performed for proactive threat detection. Rapid response playbooks are in place and updated regularly for cyber incident management.

Third-party risk management processes are in place to manage and minimise the impact of supply chain attacks.

At RIL, special attention is paid to Cyber Security awareness and to foster a culture of Cyber security as humans have turned out to be the best defenses to combat cyber threats. Innovative solutions such as R-phish are deployed to improve user awareness levels by tracking their Phishing Resistance Score levels.

Cybersecurity awareness month is observed every year with a context-based campaign. The context for this year was “Fostering a culture of cyber security”. During this month we have also released a “Cyber Suraksha Handbook” for all the users. This handbook acts as a guide to stay safe online in the digital era and contains cyber safety guidelines for Work Place, Digital Life, teens and kids, and protection of Personal data.

Cyber Security practices followed at RIL are benchmarked against Industry Best standards such as NIST, ISO 27001, etc. RIL’s O2C and Retail businesses are ISO 27001 certified whereas Retail and RBML businesses have attained PCI DSS certification. Reliance is the only organised and multi-brand retail business in the country to demonstrate PCI DSS certification continuously for the last 10 years.

Multiple layers of proactive and reactive controls are adopted for Digital Services to mitigate the vulnerabilities. All systems and security tools are monitored for any cyberattacks via a 24x7 Security Operations Centre. Continuous Improvement programs are implemented to improve the maturity and the cyber security posture of the organisation. Additionally, Reliance also ensures that the cyber security posture is validated by third-party experts periodically to obtain additional layers of assurance.

Cyber Security Posture update is made to the Board Risk Management Committee at regular intervals and their guidance is taken to further improve on the posture.

Risk Response

Reliance’s motto of ‘Growth is Life’ has always been reinforced with our commitment on conducting safe, reliable, compliant and sustainable operations.

There has been a continuous endeavour to manage risks across our existing assets at Exploration & Production, Refining & Marketing, Petrochemicals, Polyester and other dispersed facilities through world-class HSE management practices. Implementation of advanced technologies like video analytics, robotics, remote-sensing devices for inspection have reduced personnel exposure to hazardous environment.

Our People are our critical assets in managing HSE risks. We have invested significant efforts in developing and maintaining in-house competencies which are critical to manage Safety, including managing Integrity Operating Window, advanced techniques of risk assessment, deep-dive technical analysis techniques and functional safety. This talent pool helps execute risk and control studies and provides assurance with agility, while leveraging industry expertise.

Our HSE risks and controls are maintained through digital platforms enabling traceability and transparency of information to all concerned workforce for effective prioritisation and decision making.

Our involvement in regulatory bodies in setting HSE standards and participation in international and national HSE forums further aids in imbibing High Value Learnings in conducting our operations. Reliance’s strong framework of auditing, assurance and third-party verification ensures effective governance of these practices.

With the diversification of operations towards Oil to Chemicals and New Energy, this year presented new opportunities to embed HSE management best practices in the novel technologies since the conceptual stage itself. This involved strategic partnerships with industry experts, application of scientific methods to analyse the risks in the new units and devising advanced technologies for risk mitigation.

Our flagship CASHE program has seen continuity for 20^th year with massive involvement of asset facing teams and entire workforce in execution of ideas to improve Safety, Health and Environment.

Health of workforce including mental well-being has been a priority, with programmes organised through internal and external experts to provide support to workforce operating across locations.

Health and Safety Management System (HSMS) is developed and deployed with robust governance mechanism with an aim to identify, assess, respond and monitor, on a real-time basis, risks that impact business objectives.

The Retail Health and safety management system (HSMS) has been certified with ISO 45001:2018, an internationally recognised standard for Occupational Health and Safety management system. It recognises the best-implemented framework adopted by the organisation for identifying and managing occupational health and safety risks, improve performance, and promote culture of continual improvement.

Also, the approach and initiatives implemented in the business has been recognised by British Safety Council with “International Safety Award”. Retail Business was also conferred with “Road safety award” Gold with 4 stars at 7^th OHSSAI HSE Excellence and Sustainability Awards for demonstrating a strong commitment to good road safety management programs and “Best ESG Initiative to Improve Employee Development” at 2^nd ESG Summit and Awards 2022.

Risk Response

RIL has instituted a suitable vessel vetting, incident monitoring and emergency response system. A third party vetting system provides a clear picture of the vessel quality based on extensive data analysis. Periodic vendor management audits are carried out for Time Charter and STS service providers in accordance with the Marine Assurance Framework.

Emergency Response system has been tried out in real scenario and found to be adequate. Incident Management includes root cause analysis and ensuring ship-owners’ addressal of the same. The data is further used in assisting legal/ operations matter in case of any potential losses to RIL as a result of the incident.

RIL’s control framework for road transportation has matured over a period of time and is run in collaboration with contractors. The contractors are supported by the Company through capacity building for their drivers in areas such as defensive driving, route hazard mapping and real time tracking. A dedicated state-of-the-art emergency response centre provides emergency response and incident management to transporters.

Risk Response

Global Corporate Security (GCS) focuses on adopting dynamic and pre-emptive risk management strategies to safeguard and secure the Company.

GCS is responsible for securing people, assets and operations of RIL. GCS works closely with the business teams to conduct a thorough and regular assessment of all the existing and evolving risks to our operations. This is accomplished by employing the best global practices and accepted mitigation strategies to minimise the risk exposure.

We employ the best-in-class security professionals with multi-domain knowledge to draw from their vast experience. We also work in close coordination with sovereign forces and conduct regular mock drills to ensure prompt and effective response to deal with any untoward situation. High level of real time situational awareness is maintained by integrating Human Intelligence (HUMINT), Open-Source Intelligence (OSINT) and security automation dashboard, at the security operation centres.

We constantly review and upgrade our security plans and incorporate latest technological developments to include integrated security platform, high end electronic sensors, drones, seamless communication and AI based analytics across the enterprise, along with Quick Response Teams (QRTs). GCS has robust business continuity plans that are regularly rehearsed, to deal with disasters, calamities, or any other disruptions.

Digital services have developed and implemented an Integrated Disaster Recovery and Emergency Response Process. Integrated response is facilitated by various teams such as security, customer services, corporate services, corporate communication, regulatory, network maintenance and the local geographical offices to keep the networks functional and customer services intact.

It has also implemented measures for prevention and detection to any physical security threats which includes patrolling the vulnerable areas, Real-time situational awareness by deploying alarms management and monitoring through centralised Networks Operations Centre (NoC). Disaster recovery processes and drills are also conducted for managing unscheduled downtime. Security & Loss Prevention (SLP) and Field Operations teams proactively supports in reducing pilferage, theft and losses, such as equipment thefts and pilferage of fuel by deploying physical security measure, alarm alerts, video based surveillance, GPS based trackers and consumption monitoring.

To immunise the business from online and e-commerce abuse, the SLP

E-commerce team is continuously monitoring data at a transaction level and providing mitigation strategies to business. Close coordination with field teams and strong IT footprint gives the robustness required for prompt support in response to red flags being raised.

Through rigorous data analysis, physical audits and investigations, the team has been able to identify critical gaps in existing processes/systems/tech issues which lend themselves to exploitation on Ecom platform. In addition, an online fraud prevention service (engine) is also envisaged as part of long term solution.

Risk Response

Reliance has adopted a digitallyenabled comprehensive compliance management framework. It is integrated with business processes, risks and controls. Changes in regulations are also tracked and integrated within the Reliance Compliance Management System. Effective control and efficient oversight of the senior management is ensured by cascading the responsibility matrix till the last performer of the activity. Apart from assurance through three lines of defense, compliances are also periodically monitored through the Segment Compliance Committees and the Group Compliance Committee.

Regular interactions with various trade associations/ councils help in anticipating regulatory environment and through attuning to any policy changes.

The Company’s code of conduct, training as well as focus on ensuring 100% compliance and continuous monitoring have enabled a mature, digitally-enabled compliance framework.

Risk Response

RIL maintained healthy liquidity buffer as it had raised Long term Senior unsecured notes of $4.0 billion in January 2022. Even as liquidity tightened through the year, RIL and its subsidiaries accessed Short Term markets comfortably and raise short term INR liabilities (including Commercial Paper, Short-Term Loans and Overdrafts against FDs) to fund its working capital requirements. Reliance’s Retail business too strengthened the liquidity position by raising Term Loans to fund its capex and business requirements.

Interest rate risk is managed actively by maintaining an appropriate mix of Fixed and Floating rate liabilities which limits the translation of rise in market interest rates into higher coupon costs of market liabilities. RIL has raised significant amount of fixed rate liabilities over the FY 2022-23 and 2H FY 2021-22.

Foreign Exchange (FX) risk arising from the mismatch of foreign currency assets, liabilities and earnings is tracked and managed as per the Internal Risk Management Framework. A significant portion of the payables and receivables of the Hydrocarbon business are in dollars which minimises the cash flow risk on account of fluctuations in foreign exchange rates.

Direct investments are restricted to Board approved select AAA rated corporates. Debt Mutual Fund investments are managed and monitored based on a Internal Risk Management Framework.