Throughout the year, the Group’s ERM function implemented various initiatives aimed at enhancing the risk management and internal control systems, while fostering resilience in an increasingly dynamic risk landscape. Some of the notable initiatives included: • Adopting a more proactive stance to ensure assetlevel preparedness against geopolitical uncertainties and physical climate hazards. • Leveraging loss modelling to optimise the balance between risk retention and risk transfer strategies. • Undertaking a comprehensive Climate Risk Modelling Study to better prepare for and mitigate potential impacts on our assets, and make more informed decisions regarding infrastructure investments, insurance, and contingency planning. • Enhancing policies, processes and training to better equip internal stakeholders against cyber threats, data privacy issues, and non-compliance with anti-money laundering and counter-terrorism financing regulations. • Developing in-house compliance capabilities to strike a balance between business needs and regulatory requirements, thereby optimising risk management while supporting operational efficiency. • Enhancing existing applications to generate risk analysis reports and customer profiles to facilitate reporting and monitoring of project risks. • Strategically investing in resources to bolster governance, risk management and compliance efforts. • Reviewing and updating risk limits and thresholds of key risk indicators to align with the Group’s evolving business strategies and market conditions. • Conducting the Ethics and Risk Culture Survey to evaluate perceptions of transparency, maturity and effectiveness across a broader scope of regions, functions, and entities. • Conducting risk workshops to enhance employees’ understanding of risk management and ensure its integration into decision-making and business processes. • Refreshing the Control Self-Assessment (CSA) to ensure its continued effectiveness. • Conducting sensitivity analysis to evaluate how changes in key business factors (e.g. demand, interest rates, or exchange rates) impact the overall risk exposure or profitability of the Group. RISK STRATEGY AND CULTURE The Group’s risk strategy focuses on proactively identifying, assessing, and managing risks in line with long-term objectives. It aims to balance risk management with opportunity, ensuring risks remain within defined appetite and tolerance levels. Fostering a strong and sustainable ‘self-driven’ risk culture is guided by defined guiding principles that underpin the ERM operating model. Guiding Principles • Line managers are risk owners and held accountable • Risk management activities are to hinge not only on processes and systems, but equally on a right mindset and attitude • Risk management is to be benchmarked against global best practices We believe that risk management is the responsibility of all employees and should be integrated into strategy, capital allocation, decision-making, and day-to-day operations. Senior management reinforces this culture by setting the tone at the top and demonstrating strong support for risk management. Risk awareness and accountability are embedded in our governance structure, ensuring effective oversight and integration of risk management principles across all business processes. RISK APPETITE The Group has established a well-defined risk appetite and tolerance based on strategic and business objectives, which guides the management of risk across all levels of the organisation. The purpose of establishing a risk appetite framework is not to limit risk-taking, but to ensure that the Group’s risk profile remains within tolerable boundaries as opportunities are maximised. The risk appetite statements and associated risk tolerance thresholds are reviewed annually to ensure alignment with organisational objectives and to protect stakeholder interests. The Board has approved the following risk appetite statements: Strategic Risks • The Group will continue to focus on business activities in identified core markets. Apart from the core markets, the Group shall otherwise not be overly exposed to any other single country • The Group is prepared to undertake new investment and innovation initiatives commensurate to expected returns, and/or are in line with the Group’s core strength and strategic objectives. From acquisition to divestment, all investments undertaken should not have potential loss exposures that could significantly threaten the Group’s ability to continue as a going concern • The Group will avoid any situations and/or actions that may result in negative impact on our reputation and branding. Should such situations arise, they will be closely managed to preserve our reputation and brand image Treasury & Financial Risks • The Group will maintain adequate liquid assets to cover planned cash outflows and shall not take speculative positions on interest rates and foreign exchange Operational & Compliance Risks • The Group maintains a ‘zero-tolerance’ position in relation to environmental, health & safety breaches or lapses, non-compliance with laws and regulations, as well as criminally dishonest acts such as fraud, corruption, bribery and extortion • The Group will minimise operational and IT risk, subject to the cost-benefit trade-off RISK MANAGEMENT CORPORATE GOVERNANCE CITY DEVELOPMENTS LIMITED 34
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