RISK MANAGEMENT TREASURY AND FINANCIAL RISK Material Risks Key Mitigations and Controls Market Concentration Significant loss resulting from the underperformance of a single or related group of exposures. • Actively monitor and maintain the Group’s geographical and asset concentration to ensure portfolio diversification against the systemic risks. Liquidity Inability to meet financial obligations when they are due. • Monitor and maintain sufficient cash and cash equivalents, credit facilities and Medium-Term Note (MTN) programmes to support planned growth and investment opportunities. • Maintain a healthy gearing ratio. Interest Rate Increased cost of borrowing and cashflow constraints. • Maintain a mix of fixed and floating debt portfolio. • Leverage derivatives to hedge against interest rate exposure for underlying debt obligations, where appropriate. Foreign Exchange Foreign currency fluctuations on transactions and monetary assets and liabilities. • Use ‘natural hedges’, foreign exchange swaps contracts and cross-currency swaps to manage exposures. • Monitor foreign exchange risk on a continual basis. For more information on the Group’s financial risk management, please refer to the Financial Risk Management section of this annual report. OPERATIONAL AND COMPLIANCE RISK Material Risks Key Mitigations and Controls Project Management Material financial losses from cost escalations, quality issues and delayed handovers, potentially leading to regulatory penalties and weakened stakeholder confidence. • Allocate adequate resources and focusing on technically challenging and highvalue projects. • Adopt rigorous vendor pre-qualification and tendering procedures to ensure that project costs, build quality and time objectives are met. • Conduct regular site visits to manage project progress and mitigate risks of delays, poor workmanship and cost overruns. • Benchmark quality against industry standards such as BCA Construction Quality Assessment System (CONQUAS) and the Quality Mark (QM) Assessment System. 66 | CITY DEVELOPMENTS LIMITED
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