2021 Owens Corning Sustainability Report | Our Approach | Risk Management | 62 We also anticipate transitional risks as climate-change legislation and other environmental mandates lead to increases in energy prices. This can have an adverse effect on our operations, as it can represent a cost increase that we may not be able to pass along to the customer. Owens Corning has strategies in place to mitigate these risks. Chief among them is our commitment to the circular economy model, in which we work to avoid the use of virgin raw materials whenever possible, manufacture products to deliver the least negative environmental impact, and ensure that materials used in our products and packaging remain in the economy indefinitely. Our Circular Economy chapter in this report describes our commitment to this model in greater detail. In consultation with experts in the field, Owens Corning began work with The Ohio State University in 2020 to expand our efforts to assess the resilience of our strategies against a range of climate-related scenarios and time horizons. These scenarios will focus on risks and opportunities globally and at the business level. For further discussion of our climate change risks, our management of those risks, and related opportunities, please see our CDP Climate Change 2022 Report, which will be posted on the Owens Corning website later this year. More information related to this topic is also presented in the TCFD climate risk discussion in Appendix G. Loss of Highly Skilled Personnel Owens Corning depends on our senior management team and other skilled and experienced personnel to operate our business effectively. These individuals possess skills in many areas that are important to the operation of our business, sales, marketing, manufacturing, logistical, financial, business strategy, and administrative skills. The loss of any of these individuals or the failure to attract additional personnel could adversely impact our financial condition and results of operations. This is especially true as we seek to address potential staffing losses at our Science & Technology Centers, where we rely on individuals with very specific knowledge. Our technical staff brings an in-depth knowledge of our products, our processes, and our industry — knowledge that is essential to our ability to innovate — and replacing them when they retire presents significant challenges. The loss of any of these individuals or an inability to attract additional personnel could prevent us from implementing our business strategy and could adversely impact our business and our future financial condition or results of operations. Owens Corning considers this a long-term emerging risk as many of these existing senior management personnel and skilled and experienced personnel will be at retirement age in the next 3-5 years. We are working to mitigate this risk through phased retirement, which helps create a smooth transition for employees as they retire. This includes a program through which employees nearing retirement are given the opportunity to work parttime while still receiving full-time benefits. As employees prepare for retirement, they can pass along their insights and expertise, helping ensure that Owens Corning has the opportunity to continue moving forward with minimal disruption. Additional Risks Our 2021 Annual Report on Form 10-K offers an in-depth discussion of our quantitative and qualitative risks, as well as our approach for managing them. The impact of the COVID-19 pandemic may exacerbate the risks discussed in this section. The impact depends on the severity and duration of the current COVID-19 pandemic and actions taken by governmental authorities and other third parties in response, each of which is uncertain, changing, and difficult to predict. Some of the key risks that directly impact our operations include the following: 1. Low levels of residential, commercial, or industrial construction activity, which can have a material adverse impact on our business and results of operations. 2. Significant competition in the markets we serve, against which we may not be able to compete successfully. 3. Rapid fall in sales due to declines in demand. This can occur because we do not operate under long-term volume agreements to supply our customers and because of customer concentration in certain segments. 4. Worldwide economic conditions and credit tightening, which could have a material adverse impact on the company. 5. Risks associated with our international operations. 6. Natural disasters, catastrophes, pandemics, theft, or sabotage, against which we may not be adequately insured, or which may cause serious harm. 7. Climate change, adverse weather conditions, and the level of severe storms, which could have a material adverse impact on our results of operations. 8. Cost increases or reduced availability of energy, materials, or transportation. This could reduce our margins and have a material adverse impact on our business, financial condition, and results or operations. 9. Risks associated with our efforts in acquiring and integrating other businesses, establishing joint ventures, expanding our production capacity, or divesting assets.