CapitaLand Investment Limited - Annual Report 2021

76 CapitaLand Investment Limited CapitaLand Investment believes in maintaining a robust risk management framework to proactively identify, assess and respond to material risks that can impact our objectives to generate sustainable returns as a global Real Estate Investment Manager (REIM) and to create long term value for our stakeholders. By pursuing a risk strategy of optimisation of opportunities within the approved risk appetite levels instead of risk minimisation, we position CLI for long-term sustainable results. ENSURING BEST-IN-CLASS RISK MANAGEMENT STANDARDS AND APPROACHES TO OPTIMISE OPPORTUNITIES CLI’s Enterprise Risk Management (ERM) Framework is adapted from the International Organization for Standardization 31000 International Risk Management Standards. It is benchmarked against other relevant best practices and guidelines and reviewed annually to ensure its continued relevance and practicality. It sets out the required environmental and organisational components needed to identify, assess, respond to, monitor and report material risks in an integrated, systematic and consistent manner as depicted below. CLI’S MATERIAL RISKS AND OPPORTUNITIES A Group-wide Risk and Control Self-Assessment (RCSA) is conducted annually by all business units and corporate functions to identify keymaterial risks, including newand emerging events, that CLI faces in delivering our strategic objectives, its mitigating measures and the opportunities. Based on 2021 RCSA results, the measures taken to mitigate the material risks and opportunities to capitalise on are set out below: BUSINESS INTERRUPTION/ PANDEMIC Business disruptions arising from the COVID-19 pandemic have resulted in potential structural disruptions to some of the real estate asset classes. Regular Independent Review and Audit Internal and External Audit as the third line of defence reviews the adequacy and effectiveness of riskmanagement and internal control systems design and implementation so as to provide reasonable assurance to the Board. A Strong Culture of Risk Awareness The riskmanagement department works closely with a network of risk champions from each business unit and corporate function, as well as various specialist support functions, to ensure risk management practices are implemented consistently. Risk workshops are conducted regularly to ensure these practices are embedded in our decision-making and business processes. Senior Management reinforces the culture by setting the ‘tone at the top’, leading by example, and communicating our risk strategy. A Robust Internal Control System Various specialist support functions as the second line of defence are responsible for the design and implementation of effective internal controls using a risk-based approach. › Continue to place the well-being of our tenants, shoppers, guests and customers as top priority by adopting contactless technologies and innovative tech solutions to enhance safety, cleanliness and hygiene at the Group’s properties. › Future proof the Group’s business through digitalisation of business operations and processes, innovation and flexibility in the Group’s product offerings such as • accelerating our omnichannel solutions, • assisting our customers with digital transition, • providing flexible workspace solutions. › Build collaborative relationships and work closely with supply chain contractors, vendors and suppliers to achieve environmental and social goals through CLI’s Supply Chain Code of Conduct. › Ride on ongoing business digitalisation to innovate and improve product offerings. › Opportunities to reposition or repurpose our assets to meet the new norms. Risk Management Board Oversight and Senior Management Involvement The CLI Board (the Board), assisted by Risk Committee, approves the Group’s risk appetite which determines the nature and extent of material risks the Group is willing to take to achieve its strategic objectives. The Board also oversees the ERM Framework; regularly reviews the Group’s risk profile, material risks and mitigation strategies; and ensures the adequacy and effectiveness of the risk management framework and policies. Senior management team directs and monitors the implementation andpractice of ERMacross theGroup. Material Risk Key Mitigating Actions Opportunities ERM FRAMEWORK Risk Strategy Board Oversight & Senior Management Involvement Internal Control System Independent Review and Audit Risk-Aware Culture › Risk Appetite › Risk & Control Self-Assessment › Investment Risk Evaluation › Quantitative Analysis › Scenario Analysis › Whistle-blowing › Key Risk Indicators › Quarterly Risk Reporting › Portfolio Monitoring of Financial Risks › Special Risk Focus Update RISK IDENTIFICATION & ASSESSMENT RISK MONITORING & REPORTING RISK RESPONSE › Accept › Avoid › Mitigate › Transfer