Risk Management
Tata Steel’s Risk Management framework combines robust governance, proactive identification, and advanced analytics to anticipate, mitigate, and monitor risks, ensuring operational resilience, regulatory compliance, and strategic agility across the Company’s operations.
Ensuring business resilience
'Masters of Risk' award in the Metals & Mining category at the India Risk Management Awards for the 8th consecutive year
Financial Risk
Tata Steel aims to sustainably expand its capacity in India, while transitioning its UK and Netherlands operations towards low-emission steel production using electric arc furnaces (EAF). This transformation will require significant capital for both investment and decommissioning. As of March 31, 2025, the Company had a net debt of ₹82,579 crore and plans to manage its growth and deleveraging ambitions through internal accruals and external funding. Financial performance remains sensitive to global interest rates, ESG factors, commodity price volatility, geopolitical tensions, and currency fluctuations.
Mitigation
Tata Steel’s mitigation strategy involves strong cash flow generation, working capital optimisation, and portfolio restructuring to enhance operational efficiency. The Company focuses on high-return projects with short payback periods and diversifies funding sources, including government grants for green initiatives and flexible long-term debt. To address ESG risks, Tata Steel collaborates with global bodies like the TCFD for improved disclosures and sustainable financing. Its 'One Treasury' approach centralises operations to ensure effective cash flow and commodity and currency risk management.
Macroeconomic and Market Risk
In FY2024-25, global economic challenges included sluggish growth in key countries, major elections in over 60 democracies, geopolitical tensions, and tariff conflicts. China’s weakened property sector boosted steel exports, causing global oversupply and price pressure. India’s steel demand showed robust double-digit growth, but pricing pressures arose from new facilities and imports. Our European operations faced competitiveness issues due to high operational costs, slower demand growth, climate change compliance costs, and competition from imports.
Mitigation
Tata Steel has taken strategic measures to address challenges and drive growth. In the automotive sector, it maintained its leadership through high-end products and a new continuous annealing line at Kalinganagar. Construction solutions (~33% growth) and branded products like Tiscon (~19% growth) and Steelium (~8% growth) supported the top line. Hydrogen-transport pipes reinforced future-ready capabilities. Localisation, portfolio optimisation, improvement projects, and low-emission steel initiatives further strengthened our market position in India and Europe. Adjusted trade measures are expected to support steel prices.
Regulatory Risk
Regulatory challenges due to evolving laws and environmental policies, and emerging trade patterns influence business decisions and market strategies. Tata Steel Nederland (TSN) and Tata Steel UK (TSUK) are impacted by the Carbon Border Adjustment Mechanism (CBAM) and evolving energy and by-product laws. Additionally, global protectionism is rising, with TSN having a longstanding presence in the USA, where Section 232 tariffs on steel remain in effect, along with new tariffs on steel and automobiles.
Mitigation
Tata Steel ensures strict compliance with evolving regulations through robust monitoring systems and a zero-tolerance policy on noncompliance. The Company advocates fair trade practices, collaborates with policymakers, and leverages technology, R&D, and digitalisation to address regulatory changes. TSN, working with Eurofer, monitors imports to protect the European steel industry amid CBAM uncertainties. In the UK, the Company has decommissioned its blast furnaces and is building a 3.2 MTPA EAF based steelmaking unit.
Commodity Risk
Prices and supply of coal and bulk commodities are impacted by global factors such as geopolitical tensions, extreme weather, and sustainability norms. High dependency on single geographies such as Australia and South Africa and logistics disruptions pose risks to supply chain reliability. Decarbonisation efforts limit new investments in metallurgical coal, adding to potential disruptions. Agile risk mitigation and secure supply chain strategies are critical to addressing price volatility and inventory challenges.
Mitigation
To manage raw material price volatility and ensure supply security, the Company deploys measures such as Tata Steel Group-wide smart hedging strategies for key raw materials, iron ore market hedging, price forecasting tools, reverse auctions, and reliance on stable-priced captive resources. Steps such as diversifying coal sourcing, securing long-term contracts, coal blend optimisation, and improving rail transportation enhance supply chain resilience. Indigenisation focuses on developing local MSMEs while sustainable procurement encourages RRR (Reduce, Reuse and Recycle) initiatives.
Supply Chain Risk
Tata Steel operates one of the most complex supply chains in the steel industry, handling over 150 MT of raw materials and ~31 MT of finished goods globally. The 5 MT expansion at Kalinganagar adds ~20 MT material movement. Challenges include infrastructure stress in Eastern India (railways, ports), disruptions (accidents, strikes, cyclones), cost-adverse rail freight policies, and geopolitical events impacting shipping. Additionally, stricter ESG norms necessitate proactive strategies to mitigate supply chain risks and ensure continued reliability and efficiency.
Mitigation
Tata Steel uses long-term port partnerships, diversified routes, and optimised logistics networks to ensure logistical resilience. To reduce reliance on Indian Railways, it invested in private freight schemes, adding 25 new rakes in FY2024-25. Portfolio management and bunker hedging are used to manage shipping costs. Tata Steel has executed 39 biofuel vessels and 5 LNG vessels in FY2024-25 which is almost 18% of imported shipments. It's shipping emissions measurement is aligned to latest IMO guidelines and calculated 'well to wake' basis. Tata Steel also expanded the use of CNG, LNG, and EVs in road transport.
Operational Risk
The steel industry faces both external and internal operational risks. External risks include supply chain disruptions from extreme weather, regulatory changes, and logistics issues. Cyberattacks also pose a growing threat to digital infrastructure. Internally, equipment failures, delayed maintenance, ageing assets, and resource shortages can lead to unplanned downtime and increased costs. Utility disruptions—like power, water, or gas—can further impact manufacturing and reduce output.
Mitigation
The Company has consolidated maintenance functions across Indian locations to drive synergy and introduced real-time asset monitoring for predictive maintenance. Indigenisation of spares improves self-reliance amid supply chain disruptions. A disaster response plan is in place. At TSN, the Corporate Asset Management Framework provides enhanced insights on asset reliability and resource prioritisation. TSUK is building partnerships to support its upcoming scrap-based steelmaking operations.
Safety Risk
The steel industry faces inherent health and safety hazards for its workforce. Deviations from standard operating processes and safety regulations can disrupt business continuity. The expansion of operations across different geographies introduces additional challenges due to location-specific safety laws and regulations.
Mitigation
Tata Steel is committed to zero harm with a safety-first approach. Revised health and safety policies have standardised risk mitigation across the Tata Steel Group, supported by experiential training programmes, tactical emergency centres and safety reviews. Safety reward & recognition and upskilling programmes cover external partners. TSN runs the ‘TrueSafe’ programme to improve safety performance. TSUK has rolled out 'Time Out for Safety' for safety campaign for all employees and core contractors.
Community Risk
Failure to meet evolving community expectations or address concerns, could negatively affect the Company’s reputation and business continuity. There is a growing pressure from local communities proximate to Tata Steel’s manufacturing facilities in the Netherlands over emissions. Effective decarbonisation and social impact initiatives are crucial to maintain trust and avoiding potential protests.
Mitigation
Tata Steel, through the Tata Steel Foundation, designs and implements change models focused on vulnerable groups and societal development challenges in India. TSN is pursuing decarbonisation through the 'Roadmap+' initiative to lower its emissions. TSUK focuses on community regeneration and supporting small and medium businesses via its ‘Future Generations’ programme.
Cyber and Information Security Risk
Adoption of advanced technologies such as AI, Robotics Process Automation, Machine Learning, and Generative AI enriches customer interactions and fuels business growth, but also increases the risks of cyber threats, data privacy concerns, regulatory non-compliance, data integrity issues, and performance instability. Violations of regulatory data protection norms can lead to penalties and reputational harm.
Mitigation
Tata Steel has implemented robust security measures to ensure comprehensive cyber protection. Key initiatives include real-time threat detection with advanced tools, an integrated IT & OT Security Operation Centre for monitoring, and 24/7 external attack surface management to address vulnerabilities. It enables vulnerability management through security architecture, scanning tools, and Unified Threat Intelligence for risk analysis. Data privacy measures, compliance policies, regular technology upgrades, audits, and safeguards for Generative AI supported by a Zero Trust Architecture further reduce risks.