Reliance Risk Management Framework provides a consistent, clear and robust framework for managing risks across the group and thus is fundamental to our performance and progress. The integrated risk framework helps the Group to ensure that activities to manage risk are designed, implemented and operating effectively.

Enterprise Risk Management (ERM) at Reliance

The Company’s Risk Management Framework follows the below mentioned risk assessment process and thus enables the management to:

• Identify specific risks and assess overall potential exposure
• Decide how best to deal with those risks to manage overall exposure
• Allocate resources and actively manage those risks
• Obtain assurance over effectiveness of the management of risks and reporting

Governance Framework

Reliance’s Risk Management Framework is designed to be an end-to-end framework for managing and reporting risks from the Group’s operations to the Board.

Executive Committees provide oversight and governance through Group Operational Risk Committee, Group Financial Risk Committee, Group Audit and Disclosure Committee, Group Compliance Committee, and Group People Committee.

Business Risk and Assurance Committees are headed by the Business, Function and Group leadership who integrate multidisciplinary views on key organisational risks, prioritise the most relevant risks and align risk management, internal control and assurance activities across the Three Lines of Defense.

Business and Functional Leaders ensure safe and reliable incident-free daily operations through identification, mitigation and monitoring of existing and new risks on day-to-day basis.

Risks and Response

Strategic and Commercial Risks

Climate Change and Energy Transition

Impact on: N, All businesses

Risk Description

Businesses are increasingly facing physical and transition risks associated with climate change. Growing vulnerability to unpredictable weather events (acute) and changes in long-term climate patterns (chronic) could affect RIL’s assets, operations and supply chains. Furthermore, transition risks arising from changes in regulations, evolving stakeholder expectations and technology advancements could also impact RIL.

Risk Response

Reliance implements strong business continuity management strategies. Each business conducts risk assessments and tailored plans for risk management. Facilities are designed to withstand climate-related challenges. Additionally, the Company implements prevention programmes to ensure workforce well-being from climate impacts and maintains diversified supply chains for operational continuity.

RIL integrates climate-related considerations into its strategic planning, investment evaluations, risk management protocols and long‑term supply and demand projections. We have a 15-year vision towards fostering sustainable energy solutions and innovative materials. Reliance also leverages insights from its New Energy Council to mitigate risks in novel areas. Furthermore, the Company tracks the advancement towards its Net Carbon Zero goal, supported by a robust governance framework.

Commodity Prices and Markets

Impact on: M, O2C and Retail

Risk Description

Global crude oil prices fluctuated between US$ 70/bbl & US$ 96/bbl on concerns of high inflation & interest rates affecting demand and risk of supply due to conflicts between Israel-Hamas, Russia-Ukraine, and attacks in the Red Sea on ships. New refining capacities in Nigeria, Middle East and China capped product prices.

Non-availability of commodity goods at the right price, quality and quantity can adversely affect our retail business.

Risk Response

RIL navigated the volatility through sourcing from diverse regions like Middle East, African & Latin America. Also, increased use of Time Chartered fleet & RIL’s global presence helped.

It’s RIL’s constant endeavour to ensure operational stability and profitability for commodity goods. Diversifying and tracking suppliers’ performance, ensuring compliances, investing in market intelligence to monitor markets / price trends and maintaining inventory levels to mitigate the risk of supply shortages/ disruptions are periodically monitored.

Customer Experience and Retention

Impact on: S, All businesses

Risk Description

Sub-optimal customer experience may result in customer dissatisfaction and churn.

Changing customer preferences could weaken our value proposition leading to low loyalty/ repeat purchases.

Risk Response

For sustained customer experience, various measures are adopted such as superior usage & billing experience, network access and competitive tariff pricing, best-in-class customer service backed by latest technologies.

Taking cue of consumer preferences to purchase online, Reliance Retail has strategised to be an omnichannel retailer. The company has taken measures for online and offline channels to retain and attract new consumers. On the customer complaints front, the business has a dedicated ‘Customer Service’ team that ensures faster resolutions.

Oversight over Investee Companies/Alliances

Impact on: F M, All businesses

Risk Description

Strategic alliances with other businesses could have an adverse impact on our financial performance and competitive position.

Risk Response

We focus on strong governance processes and internal controls including integrating the financial systems and operational processes for our strategic alliances. The companies are brought under the Reliance Risk Management Framework, providing a holistic view to formulate Annual Operating Plans across its various businesses and functions.

Talent to Support Scaling Business

Impact on: H, All businesses

Risk Description

The ability to attract, nurture and retain talent is necessary to enable smooth operations and future needs.

Risk Response

Reliance nurtures its human resources though regular training, skilling initiatives and offers diverse opportunities.

Data Privacy Risk

Impact on: I, All businesses

Risk Description

Reliance businesses collect personal data to create innovative products and services. However, this raises concerns about data privacy, security, and ethical use of data.

Risk Response

Reliance follows the privacy-by-design and privacy-by-default approach to makes sure that personal data is used ethically and legally.

Cybersecurity Risk

Impact on: I, All businesses

Risk Description

Cyber threat has been consistently rising as a key business risk in global rankings. It is of particular significance for Reliance businesses that support critical infrastructure, connectivity, and e-commerce solutions.

Risk Response

Reliance’s cybersecurity strategy is aligned with business and marked to threat. A defence-in-depth approach is followed where multiple technology solutions and controls are deployed to improve resilience against diverse and evolving threats.

Safety and Operational Risks

Health, Safety, and Environmental (HSE) Risks

Impact on: H M N, All businesses

Risk Description

HSE risk management is paramount to sustainable growth. RIL has process in place to identify potential risks that may impact our stakeholders & stands committed to control HSE risks.

RIL’s business operations involve activities that may possess risks of accidents and injuries. Expanding footprint increases vulnerability to incidents like fires or natural disasters.

RIL faces industrial & supply chain risks like process safety, fires, loss of containment of hazardous material, explosion, natural disasters, extreme weather, human error, risk to personnel, etc.

Risk Response

Our state-of-the-art facilities, operated by skilled professionals, undergo continuous monitoring and mitigation to ensure operational excellence throughout their lifecycle. We have made significant progress in digitalising our risk processes, enabling enhanced visibility and control across all levels. Regular review of risks ensures our risk management practices stay current and effective. Furthermore, our Subject Matter Experts conduct rigorous oversight, verifying design and operating effectiveness of controls, reaffirming our dedication to robust HSE risk management and sustainability.

Adopting a proactive & risk based HSE management approach based on ISO 45001:2018 framework retail business aims to create safer workplaces & enhance operational efficiency & have site-specific emergency plans & conduct regular mock drills.

RIL has extensive systems meeting or exceeding regulatory requirements ensuring safe operations in its plants & supply chain.

Physical Security and Natural Calamity Risks

Impact on: M N, All businesses

Risk Description

RIL is vulnerable to various threats that may disrupt operations. Geopolitical turbulence and natural disasters can pose a downside risk.

Risk of riots, vandalism & natural disasters have impact on network assets. Further, risks include asset protection, loss prevention, platform abuse and data theft amid online growth.

Risk Response

Risk management strategies are adopted to keep our people, assets, information, and reputation secure. Security understands business requirements, identifies priorities, and suggests mitigations measures to support growth. The security posture is continuously reviewed to maintain efficiency.

Jio has implemented a disaster recovery response mechanism which includes measures like network outages alerts, patrolling in vulnerable areas, meetings with local leaders and Law Enforcement Agencies, implement Crisis management, BCP / DRP (Business Continuity Planning - Disaster Recovery process), Maintaining stock of critical items & Insurance Coverage.

Meticulous risk assessment guides strategy reprioritisation. Focus on physical, technological security, predictive loss-analytics and camera-analytics are yielding results. Proactive data analytics in e-com space has mitigated risks to acceptable levels.

Compliance and Control Risks

Regulatory Compliance Risks

Impact on: M S, All businesses

Risk Description

Increased regulatory scrutiny and changing businesses with strategic acquisitions require swift alignment with legal & regulatory compliances.

Risk Response

Reliance has adopted a digitally enabled comprehensive compliance management framework, integrated with its business processes, risks and controls and equipped to align with changes in business & regulatory environment. It enables efficient governance and zero tolerance to non-compliance.

Financial Risks

Treasury Risks

Impact on: F, All businesses

Risk Description

RIL faces following key financial risks which is actively managed by Treasury.

Liquidity Risk: Central banks maintained tight monetary & liquidity conditions globally in FY24.

Interest Rate Risk: High interest rates in US and India translates into high finance costs.

Foreign Exchange Risk: Rupee depreciation impacts the landed cost of the foreign currency liabilities as well as its repayment.

Credit Risk on Investment Portfolio: Reliance’s investment portfolio comprises Corporate Bonds and Debt Mutual Funds which has credit risk on issuers.

Risk Response

RIL successfully raised foreign currency and INR LT borrowings to fund its capex and working capital requirements despite tight liquidity conditions.

An appropriate mix of Fixed and Floating rate liabilities was maintained to limit the translation of high interest rates into finance cost.

RIL used a combination of natural and market hedges to protect against foreign exchange risk.

Credit risk in the portfolio is monitored based on tight Internal Risk Management Framework.

Insurance – Risk Mitigation

Utilising insurance as a risk management tool, RIL thoroughly assesses risks for appropriate coverage. When procuring relevant insurance coverage, our primary objective is to ensure effective cover that can address any potential adverse financial impacts on our balance sheet.