46 CapitaLand Investment Limited Risk Management Risk Governance The CLI Board (the Board) oversees risk governance and ensures that senior management maintains robust risk management and internal control systems to safeguard the interests of the Group and its stakeholders. The Board, with support from the Risk Committee, approves the Group’s risk appetite (risk tolerance) which determines the nature and extent of material risks Ü¥Ł$ÒÄàÏŁ§ÖŁì§··§¾¡ŁÜÄŁÜ~µŁÜÄŁ~¥§ëŁÖÜÒ~Ü¡§ŁÄ³Ü§ëÖńŁ]¥Ł Ä~ÒŁ~·ÖÄŁÒ¡à·~Ò·òŁÒë§ìÖŁÜ¥Ł$ÒÄàÏŤÖŁÒ§ÖµŁÏÒÄĝ·ŅŁ½~ÜÒ§~·Ł risks and mitigation strategies, and ensures the adequacy and effectiveness of the risk management framework and policies. The senior management team supports the Board and Risk Committee to ensure effective risk governance and oversight. They are responsible for directing and monitoring the implementation of risk management practices throughout the Group, which includes tracking risk exposure using key risk indicators. Approve the Group’s risk appetite and review the $ÒÄàÏŤÖŁÒ§ÖµŁÏÒÄĝ· Direct and monitor the §½Ï·½¾Ü~ܧľŁÄ ŁÒ§ÖµŁ management practices 8*Ł Ä~ÒŁÄ Ł §ÒÜÄÒÖ Risk Committee Senior Management Internal Control System CLI’s ERM Framework operates within a risk governance structure comprising three lines of defence to foster a strong culture of risk awareness. A Strong Culture of Risk Awareness Nurturing a strong risk culture helps ensure effective and consistent implementation of risk management practices throughout the Group. The first line of defence, comprising employees, risk champions or representatives from business units and corporate functions, collaborates closely with the second line of defence to instill a culture of risk ownership and accountability. In addition, the departments under the second line of defence regularly conduct workshops to enhance employees’ understanding of risk management and ensure the integration of risk management principles into decision-making and business processes. Senior management reinforces this culture by setting the tone at the top, leading by example, and effectively communicating our risk management strategy to employees. • Employees are accountable for effectively identifying and managing risks arising from their business activities. • Risk champions are appointed to drive this effort. st Line • Specialist functions, including risk management and compliance, provide oversight of risk management and compliance practices, fostering and embedding a culture of risk ownership and accountability. nd Line • The Internal and External Audit teams evaluate the design and implementation of risk management and internal control systems to ensure their adequacy and effectiveness. This in turn, provides the Board with reasonable assurance. rd Line 47 Annual Report 2024 Material Risks and Key Mitigating Actions CLI conducts an annual Group-wide Risk and Control Self-Assessment (RCSA) exercise that requires all business units and corporate functions to identify, assess and document key material risks, including new and emerging risks, that CLI faces as well as the respective mitigating measures and any opportunities that we can leverage to achieve our strategic objectives. ]¥Ł Ä··Ä짾¡Ł½~ÖàÒÖŁ~ÒŁÜ~µ¾ŁÜÄŁ½§Ü§¡~ÜŁÜ¥Ł§¾Ü§ĝŁ½~ÜÒ§~·ŁÒ§ÖµÖŁ~ÖŁÄ¾ŁÜ¥ŁĤĢĤĦŁS W ŁñÒ§Öń • Conduct a detailed assessment of physical risks and health and safety related risks in the evaluation of any new acquisitions. • Incorporate shadow internal carbon price in the evaluation of new investment/ capital expenditure decisions. • Regularly review the Group’s mitigation and adaptation efforts, which include future-proofing our portfolio, enhancing the operational efficiency of our properties and establishing targets for carbon emissions reduction, and water, energy and waste efficiency. • Implement measures to drive decarbonisation across the Group’s value chain. • Entrench a sustainable safety culture through deep safety capabilities, disciplined safety practices, and a progressive and pervasive safety mindset that drives key safety performance targets for both CLI and our supply chain. • Maintain CLI’s Environmental, Health and Safety Management System which is ñÜÒ¾~··òŁÒܧ §ŁÜÄŁ*WEŁģĦĢĢģŁ~¾Ł*WEŁĦħĢĢģŁ§¾ŁģīŁÄà¾ÜÒ§Öń • For more information, please refer to CLI’s Global Sustainability Report (GSR) ĤĢĤĦŅŁÜÄŁŁÏà·§Ö¥ŁòŁĥģŁ>~òŁĤĢĤħń • Maintain a dedicated focus on driving growth and sustainable returns through four fee income-related verticals of Listed Funds Management, Private Funds Management, Lodging Management and Commercial Management. • Ensure proactive capital management, focusing on capital recycling, capital efficiency and fundraising to optimise CLI’s capacity to capture opportunities. • Leverage CLI’s strong network of investment and asset management professionals with deep knowledge in multi-sector assets and proven track record in growing funds under management to source for opportunities in local markets and stay on top of market trends. • Execute CLI’s Cyber Security Strategy by continuously reviewing against existing or evolving threat landscapes, and institute measures to minimise vulnerability exposure and manage threat vectors, including enhanced protection controls for systems that hold personal data. • Conduct regular mandatory staff IT Security Awareness Training to mitigate human intervention in the information security chain. • Conduct the IT Security Incident Management Procedure test, third-party vulnerability test and annual Disaster Recovery Plan exercise to assure IT infrastructure/management system security and ensure timely recoverability of business-critical IT systems. • Board oversight with regular updates to the Risk Committee on the state of Cyber Security risk activities and key control improvements, with periodic review and updates of the Group-wide IT Security Policy. • Keen industry competition from established real asset managers who are able to attract and manage more capital by meeting investors’ expectations or reacting aptly to market trends. • Ongoing business digitalisation exposes the business to IT-related threats, which may result in compromising the confidentiality, integrity and availability of the Group’s information assets and/or systems. MATERIAL RISKS KEY MITIGATING ACTIONS Competition • Physical risks such as rising sea levels, violent storms, long intense heat waves, flash floods and freshwater depletion. Transition risks such as increasingly stringent regulations and expectations from stakeholders. • Increased expectations from stakeholders for our properties to provide a safe and healthy environment that contributes to their well-being. Climate-related • Diversify our portfolio across asset classes and geographies in accordance with Board-approved country limits. • Focus on CLI’s core markets in Asia where the Group has operational scale and where underlying economic fundamentals are more robust. • Actively monitor macroeconomic trends, policies and regulatory changes in CLI’s key markets. • Economic instability or changes in macroeconomic factors such as inflation or unemployment, which result in challenging business conditions. Economic Safety, Health and Well-being Cybersecurity and Information Technology
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