2024 SUSTAINABILITY REPORT Climate Resilience 34 Risk Analysis Physical Risks Climate change and extreme weather events pose a risk to our operations and to the health and well-being of our employees. Regulatory Risks Disruptions caused by extreme weather could temporarily impact our ability to meet regulatory requirements, including those outlined in operating and environmental permits. Operational Risks Severe weather events may result in production interruptions if sites are unable to operate, or cause supply chain disruptions that delay the collection of inbound tires or the distribution of outbound products. Additionally, significant losses from climate-related events could impact our ability to secure insurance coverage in the future. Financial Implications Extreme weather events may lead to costly repairs to operating sites and equipment, as well as additional expenses to manage business interruptions. Delays in tire collection, production, or outbound shipments could result in revenue loss. Insurance premiums may also increase due to higher loss frequency and severity. As part of our annual insurance renewal process, Natural Catastrophe (CAT) modeling is conducted to assess extreme weather risks and determine the probability of impact to Liberty Tire Recycling’s sites and operations. The results of this modeling informs our insurance strategy, helping us determine appropriate coverage levels and assess the need for additional Earthquake or Flood insurance. Property insurance plays a critical role in protecting the company from financial loss due to weather-related business interruptions and damage to property and equipment. We have initiated the development of a state-of-the-art Enterprise Risk Management Framework to enhance our approach to identifying, assessing, and mitigating climate-related risks. Annual Risk Assessments We conduct CAT modeling and loss analytics annually to evaluate our exposure and determine appropriate insurance coverage. Operational management is informed of identified risks to ensure preparedness. Insurance Strategy We maintain Property, Earthquake, and Flood insurance coverage, transferring financial risk associated with covered losses. Risk Prevention Investments We allocate capital expenditures toward risk mitigation measures, such as fire prevention and maintenance, to minimize potential damages. Future Planning We are developing systems to better calculate the financial implications of climate risks, allowing us to make more informed revenue projections and enhance our resilience to extreme weather events. Risk Mitigation & Management
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