Before looking at 2021, let’s rewind the journey of Stora Enso a little. In 2014, allegations of child labour in Stora Enso’s strategic alliance Bulleh Shah Packaging’s waste paper and wheat straw distribution network in Pakistan made a dent in the Finnish pulp and paper manufacturer’s profitability. “We aim to promote clarity and transparency within and outside the group concerning the worldwide responsibility difficulties we have had and continue to have in China, India, and Pakistan,” said Karvinen, the company’s CEO. The organisation claimed to be investing heavily in attempts to combat child labour in Pakistan, and promised that things will gradually improve.
They had no choice but to act and restructure their renewable packaging division. They also lost their consumers’ trust, and their reputation suffered as a result.
The South China Morning Post (SCMP) claimed in 2021 that Stora Enso supplied the majority of the chemical wood pulp material used in Xinjiang. The manufacturing operations located in China’s Uighur region compelled children to work in factories.
International observers and human rights organisations have also documented the mistreatment of the Uighur minority. At least one million Uighurs are said to be detained in internment camps, where they are subjected to forced labour and female sterilisation. Clients in Europe are particularly sensitive to such difficulties. The link of the Stora Enso name with detention camps and child labour may create a significant negative influence on the company’s reputation. It is also anticipated that the corporation will lose $75 million in financial damage as a result of the incident.
If the corporation decides to relocate its activities back to Europe, the cost is expected to be $100 million. Furthermore, the cost of running the European factory will be 30% higher than the existing cost of running the factory in China.
Now, fast forward to 2021, keeping in mind the dynamically changing situations and the risks arising as a result of them, Stora Enso has decided to hire a risk management expert to better manage the risks faced by the organisation. As a risk management consultant, you have been approached to provide your expertise.
Suggested word limit: 20-75 words
Categorise the risk identified into different domains (for example, financial, operational, IT, etc.) (4 marks)
Question 3.(1 mark+ 2 marks)
Suggested word limit: 50-150 words
Based on the risk management process at Stora Enso, what are the maturity stage and status of the company in the risk maturity graph shown below? Justify your answer.
Risk maturity stages