CSL Limited Annual Report 2022/23 26 CSL operates in a fast paced and constantly evolving environment of science, technology and healthcare. Although there aremany risks inherent with operating in these environments and industries, for example research and development, intellectual property and clinical trial risks, CSL regularly reviews its group risk profile to identify and assess material business risks. This includes external and emerging risks that could affect CSL’s global operations. We are also exposed more broadly to external risks such as the escalating trend of cyber threats and data privacy breaches and we regularly review our group risk profile to proactively identify material business risks and opportunities and assess external risks that could affect our global operations. Managing risks includes both the mitigation of disruptive risks and the preparation for seizing opportunities. Our global Enterprise Risk Management Framework is designed to ensure robust risk oversight that is fit-for-purpose for both the operation of our business and to support our strategy and deliver on our commitments to patients and public health. As part of CSL’s enterprise risk management process, the Board and management team have identified the key risks that are material to CSL. These material group risks are described below along with an explanation of our approach to managing them in the context of delivering on our 2030 Strategy. Key financial risks are set out in Note 11 (Financial Risk Management) to the Financial Statements. There are other risks that are inherent in the vaccine, plasma therapies and pharmaceutical industries, including iron deficiency and nephrology, besides those detailed below or in the Financial Statements, that could also adversely affect CSL’s business and operations. Patient safety and product quality Patient safety is paramount for CSL’s ongoing sustainability as a global biotechnology leader and our long-term strategy of efficiency and reliable supply. When we talk about patient safety, we mean both in the use and administration of registered products as well as in the conduct of our clinical trials. While it is inherent in our industry that patients and trial participants may sometimes experience adverse reactions to therapies, CSL’s manufacturing, product quality assurance and pharmacovigilance practices serve to ensure the highest standards of safety and the preservation of our reputational integrity. Our processes and procedures adhere to global good pharmacovigilance practice (GPV) and good clinical practice (GCP) standards, and we seek to ensure that product information is up-to-date and contains all relevant information to assist healthcare practitioners to appropriately prescribe CSL products. For clinical trials, participants are informed about and acknowledge awareness of the potential benefits and risks of participation in the trial through use of Informed Consent Forms approved by relevant regulators, institutional review boards and independent ethics committees. Comprehensive qualitative and quantitative safety signal detection activities are performed throughout the development programs and the lifecycles of our marketed products. Furthermore, our pharmacovigilance risk management systems seek to ensure that potential and identified safety risks are proactively addressed and above all appropriately mitigated. In terms of meeting product quality requirements through our manufacturing and supply, we adopt and comply with a broad suite of internationally recognised standards through the CSL Quality Management System, including good manufacturing practice, and good distribution practice (GDP) that includes audits of third-party vendors and suppliers. We are frequently inspected by independent regulatory authorities auditing compliance with these standards. Product innovation and competition We recognise that an impediment to delivering on our innovation and sustainable growth strategies is the changing competitive landscape for new technologies and disruptive therapies, such as gene and cell therapies. This material risk may alter the economics and characteristics of, and the demand for, CSL’s plasma and adjacent therapies, and may also affect our platforms and capabilities in plasma fractionation, recombinant technology, cell and gene therapy and vaccines technology. We strategically review our existing and future product pipeline against market demand and continually evaluate our competitive landscape. A key part of our strategy includes diversity through our multiple therapeutic areas and scientific platforms. We incorporate product lifecycle development and management, as well as development of new therapies, in strategies for each therapeutic area. In addition to proprietary research, CSL’s competitive approach includes licensing, acquiring or partnering with third parties to remain competitive and advance growth within our chosen therapeutic areas. With respect to continued growth and innovation in the competitive global influenza vaccine market, we recognise the need to continue leading in the development and manufacture of influenza vaccines including cell-culture technology and investigating the use of next-generation mRNA technology for the development of both influenza and COVID-19 vaccines. Failure to capitalise on innovative technology will diminish growth in this product sector, whereas success will deliver competitive advantages. Supply, capacity and operations Having a sustainable and reliable supply chain is critical to the success of our 2030 Strategy, particularly to achieving consistent, economical and efficient supply. Any disruption to supply has the potential to impact our operations. We constantly monitor the demand for our products over a 10-year horizon as well as our capacity to collect and acquire human plasma, iron, eggs and other rawmaterials essential to the manufacture of our products. We also monitor the scalability of specialised companies that supply rawmaterials, software and bespoke manufacturing equipment to match our business demand and growth objectives. 4 CSL’s Material Risks
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