A RISK MANAGEMENT STRATEGY TO IDENTIFY AND PRIORITISE FACTORS AFFECTING INDUSTRY’S CARBON TAX LIABILITY

The proposed South African carbon tax system forms part of an \nextensive structure of strategies aimed at addressing the main \nchallenges of climate change. The system is, however, complex, \nwith various concerns and uncertainties. Industries therefore need \nto adapt positively in order to ensure their sustainability and \ncompetitiveness. This paper presents a risk management strategy \nfor industries to identify and prioritise potential factors affecting \nthe cost of carbon tax. The risk management strategy consists of \nfive phases: 1) establishing the concept, 2) identifying the \nassociated risks, 3) analysing the risks, 4) evaluating the risks, and \n5) managing the risks according to relevant international or national \nstandards. The risks are effectively prioritised by evaluating the \nindividual severity, likelihood, and correctability of each risk. The \nstrategy is applied to case studies in the iron and steel, \nferrochrome, and cement industries. The combined carbon tax \nexposure for these case studies is about R453 million. A discussion \nof the results reveals that the risk management strategy can be used \neffectively to identify and prioritise carbon tax-associated risks, \nand further mitigate the potential tax liabilities