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    Interview with Matt Kuehn Key risks & appetite

    Risk framework

    TSN operates in a rapidly evolving environment, shaped by significant geopolitical tensions, economic shifts, technological disruption, societal change, and increasingly stringent regulatory and sustainability expectations. The steel industry faces heightened uncertainty due to global fragmentation, volatile energy markets, accelerating competition — particularly from China — and the EU’s tightening environmental and health legislation, while the pace of Europe’s own decarbonisation transition has become less predictable.

    The strategy of TSN is focused on the transition to Green Steel. To fulfil its strategy, TSN has launched the SCALE transformation programme to become a more agile organisation, more centrally managed, more steering on responsibilities, less bureaucratic and to enable faster decision-making to restore profitability and strengthen its competitive position.

    As part of the transformation programme, TSN has initiated the development of an integrated Risk & Compliance framework, supported by a strengthened Risk & Compliance organisation. The integrated framework aims to create:

    • One shared approach in all risk and compliance domains (strategic, financial, operational and regulatory & compliance) - ensuring alignment, comparability, and a common language for risk and compliance across TSN;

    • A strengthened governance including role segregation, escalation lines and oversight mechanisms that support effective accountability and countervailing power;

    • Improved visibility of risks and compliance requirements, considering both external and internal factors as well as short-, medium- and long-term impacts. This enhanced transparency supports reporting and enables decision-making.

    The framework enables risk management in an increasingly complex environment, compliance with applicable laws and regulations, risk awareness and builds towards a compliance culture. It builds on the foundations already in place within TSN, while recognising that achieving full maturity in this area will require a multi‑year effort.

    When assessing risks and changing laws and regulations, TSN considered the potential impact and likelihood as well as the velocity (time for impact to business). This process is required for understanding the potential consequences of each risk or new/changed law or regulation and for prioritising mitigating actions and adequate resources accordingly. The Risk & Compliance function provides insight into identified key risks and compliance issues including their severity, trajectory and potential impact on the execution of TSN's strategy to the Board of Management (BoM) and Audit Committee (AC) of the Supervisory Board.

    To benchmark risks and decide on the required mitigating actions, TSN has developed risk appetite statements for the following risk areas:

    Strategic: We are focused on creating profitable, sustainable growth and strong cash flows that create long-term stakeholder value, and we continuously adapt our business to changes in the external environment. In doing so, we accept related risks moderately.

    Financial: We have a limited appetite for financial risks. We accept market-related financial risks where these are prudent, well understood, and appropriately managed. We have a low appetite for financial management risks and aim to minimise exposures related to liquidity, credit, capital structure, and financial reporting integrity.

    Operations: We have no appetite for risks that can compromise human safety. Our objective with regard to other risks related to our operations is to minimise these - to the extent possible. Having said that, we do allow for informed risk-taking in the context of optimising operational performance.

    Regulatory & compliance: We have no appetite for breaches in the areas of environmental compliance or business integrity.

    In terms of employee behaviour and business culture that form the foundation of risk management, we foster a culture aligned with the Tata Code of Conduct, with a focus on ethical and compliant behaviour, continuous learning, constructive cooperation and diversity. The risk appetite statements further reinforce this culture by providing clarity on acceptable levels of risks across the different risk domains. They guide the selection and design of the mitigating measures for managing the risks within the set boundaries.

    The following sections provide further detail on the risks and uncertainties that could materially and adversely affect TSN’s business, financial condition, operating results, reputation, or prospects, together with the mitigating actions and the control framework TSN has established to manage and monitor these risks. The sustainability‑related impacts, risks and opportunities arising from these dynamics and identified through the double materiality assessment are described in detail in the Sustainability Statements and should be read in conjunction with this chapter.