Managing Risks

Protecting people and our business.

 

People designing product

Gap Inc. has developed systems and procedures focused on identifying and managing risks—including those related to sustainability. 

At the enterprise level, our Internal Audit team conducts annual risk-assessment interviews with more than 60 of the company’s top executives and Board members. The team interviews a subset of these executives every quarter to track changes in the company’s risk profile. Our Internal Audit team uses these risk-assessment interviews, as well as a consideration of external factors affecting our company and industry, to develop heat maps that identify the most significant risks to the company. The team prioritizes risks based on the likelihood and severity of their potential impact on meeting the company’s strategic initiatives and maintaining business operations. We then monitor these areas for trends. Our executive leadership team and the Board review and sign off on enterprise risk assessments.

We use tools to help prioritize risks and opportunities, including a sustainability materiality assessment, assessment of representative products and a stakeholder engagement process.

In addition, our Global Sustainability team works with business partners and experts to assess the importance of potential social and environmental risks and opportunities to our business and external stakeholders, including suppliers and the people who make our products.

To do so, we regularly assess human rights risks throughout our supply chain, leveraging relevant reports on government protections, worker and stakeholder engagement, consultation with civil society organizations, and learnings from our industry peers. For example, we are part of the American Apparel and Footwear Association Social Responsibility Committee to receive and to contribute information regarding supply human rights risks in the supply chain. 

We also rely on local team members throughout regions that we source from to monitor risks, including emerging labor and human rights issues. Our local team members help ensure that assessments consider geographic risks of potential human rights and environmental risks, vulnerable groups, Gap Inc.’s relationship to the risk, and appropriate grievance and remediation channels. When human rights risks are surfaced, we investigate and conduct due diligence on potential impacts, monitor remediations, and identify ways to improve risk mitigation moving forward.

These include the risks that climate and environmental impacts could pose to our business. The team uses tools to help prioritize risks and opportunities, including a sustainability materiality assessment, assessment of representative products and a stakeholder engagement process. For these materiality and other risk assessments, we consider such factors as the magnitude, likelihood and time horizon of potential impacts on our business and stakeholders. We also develop country-specific strategies that take local context into consideration while developing our program and addressing key issues.

At the physical asset level, our Business Continuity Planning (BCP) team analyzes, prioritizes and helps mitigate risks to our owned and operated facilities and stores resulting from extreme weather, natural hazards and other external events. The BCP team uses predictive and actual models from the U.S. National Oceanic and Atmospheric Administration (NOAA) and other national and international agencies, which are overlaid against all of Gap Inc.’s facilities for tracking potential and actual impacts. The team uses a risk-assessment tool to determine the event and company risk and the residual risk remaining after preparedness plans are developed.

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