No smoke without risk management

It’s been an uncertain few years for tobacco firms, with multi-billion-dollar lawsuits threatening to bring the industry to its knees. Given the uncertainties in its business, British American Tobacco has chosen to pursue a conservative risk management strategy. By Hann Ho

Tobacco has got to be one of the most risky businesses to be involved in. Along with managing volatility in commodity prices, foreign exchange and interest rates, tobacco firms run the risk of being slapped with multi-billion-dollar lawsuits. Rumours of litigation can lead to a drop in a firm’s share price and a surge in its credit spreads, in turn affecting the ability of a company to access funding. Given these uncertainties, the key mantra of British American Tobacco’s (BAT) risk management