48 CapitaLand Investment Limited Risk Management • Measure and evaluate financial risks using multiple risk management models, including conducting stress testing. • Hedge and limit certain financial risk exposures using various forms of financial instruments. For more details, please refer to the Financial Risk Management section on page 170. • Actively monitor the geopolitical environment, government policies and regulatory changes to anticipate shifts in trade, growth and innovation in our key markets. • Establish good working relationships with local authorities to keep abreast of regulatory and policy changes, and lobby or engage with local authorities. • Foster a culture of ethics and integrity in the Group. • Adopt a zero-tolerance stance against fraud, bribery and corruption (FBC) across our businesses. • Communicate our commitment to integrity from the top through policies and practices, such as the FBC Risk Management Policy, Whistle-blowing Policy, Ethics and Code of Business Conduct Policies and Anti-Money Laundering and Countering the Financing of Terrorism Policy. • Implement e-learning modules to enhance awareness among employees and provide training on avoiding or preventing non-compliant behaviour. • Leverage learning and development programmes, along with internal and external talent pools to enhance the skills of our workforce and address capability gaps. • Conduct regular Employee Engagement Surveys to improve communication and the work environment, fostering a more positive and engaged workforce. • The CLI Talent Council oversees talent nominations, leadership development plans and performance evaluations to ensure a robust pipeline of leaders for current and future needs. • Maintain a framework that proactively identifies the applicable laws, regulations and rules, assesses the regulatory and compliance risks, and embeds compliance risk mitigation measures into day-to-day operations. • Leverage in-house specialised teams such as legal, compliance and tax, and external consultants to provide advisory services and updates on changes to laws, regulations and rules. • Maintain Group-wide policies and procedures to address the requirements of the applicable laws, regulations and rules such as the Personal Data Protection Policy, Anti-Money Laundering and Countering the Financing of Terrorism Policy, Global Sanctions Compliance Policy and Tax Strategy. • Adopt e-learning modules to raise awareness and train employees on ways to avoid or prevent non-compliant behaviour. • Instability or political changes in a country, changes in international policies or relations between countries that could lead to sudden changes in regulations and sentiment in major economies and key markets where CLI operates. • Inability to attract and retain talent and/or build organisational capabilities to support the achievement of CLI’s objectives. • Non-compliance with applicable laws, regulations and rules, relating to fund management, tax, data protection and privacy, financial crimes and sanctions in the major economies and key markets where CLI operates. MATERIAL RISKS KEY MITIGATING ACTIONS Geopolitical • Exposure to financial risks involving liquidity, foreign currency and interest rates and their volatility. • Any form of fraud, bribery and corruption that could be perpetuated by employees, third parties or collusion between employees and third parties. Financial Fraud, Bribery and Corruption • Conduct a comprehensive independent risk evaluation for all projects above a stipulated investment value threshold. • Review hurdle rates and weighted average cost of capital annually based on relevant risk-adjusted input parameters that serve as investment benchmarks and make necessary adjustments accordingly. • Maintain a robust investment approval process including comprehensive due diligence supported by an inter-disciplinary internal team, and/or local independent consultants to advise on legal, tax, building design, quality, environmental, health & safety, security, and compliance with local laws and regulations. • Deployment of capital into loss-making or belowtarget return investments due to wrong underwriting assumptions or poor execution. • Inadequate planning to identify suitable divestment opportunities. Human Capital Investments and Divestments Regulatory and Compliance 49 Annual Report 2024 Emerging Risk Management As we navigate an increasingly complex global environment, identifying and understanding emerging risks is crucial to strengthening our competitiveness and resilience. CLI adopts a systematic approach to proactively identify and manage future risks and opportunities, which is regularly reviewed to ensure effectiveness and relevance. • Maintain Group-wide Guidelines on Use of AI Systems that provide guidance for the responsible and ethical use of AI. • Adopt a zero-tolerance stance against the use of any harmful, biased or discriminatory content. • Actively monitor and adapt to changes in AI-related regulations, guidelines and industry standards to ensure compliance and best practices. • Implement training programs to strengthen AI literacy, fostering a culture of AI ethics, responsibility and informed decision-making. • Ensure robust governance of AI systems and tools through dedicated oversight from the CapitaLand AI Governance Board. • Board oversight on management and monitoring of material ESG factors, §¾·à§¾¡ŁÒ¡à·~ÒŁàÏ~ÜÖŁÄ¾Ł 8*ŤÖŁĤĢĥĢŁWàÖÜ~§¾~§·§ÜòŁ>~ÖÜÒŁP·~¾ŁřW>PŚŅŁ¡Ò¾Ł capital expenditure plan and environmental incidents. • Maintain CLI’s Environmental, Health and Safety Management System (EHSMS), 쥧¥Ł§ÖŁ~à§ÜŁñÜÒ¾~··òŁÜÄŁ*WEŁģĦĢĢģŁ~¾ŁĦħĢĢģŁÖÜ~¾~ÒÖŅŁì¥§¥ŁÖÒëÖŁÜÄŁ ½Ä¾§ÜÄÒŁÜÒ~¾Ö§Ü§Ä¾ŁÒ§ÖµÖŁÒ·~ܧ¾¡ŁÜÄŁ·§½~ÜŁÒ¡à·~Ü§Ä¾ÖŁ~ÒÄÖÖŁģīŁÄà¾ÜÒ§Öń • Conduct portfolio review on the required capex for CLI’s global portfolio to meet 8*ŤÖŁĤĢĥĢŁW>PŁ¾ë§Òľ½¾Ü~·ŁÜ~Ò¡ÜÖŁ ÄÒŁ~ÒľŁ½§Ö֧ľÖŅŁÄ¾ŕÖ§ÜŁÒ¾ì~·Ł energy, energy efficiency, water efficiency and green certification. • Conduct ongoing monitoring of global geopolitical tensions, economic policies, trade relationships and emerging risks, to understand how these are interconnected and assess their potential impact on CLI. • Engage in active dialogue with regulators, policymakers and industry leaders to stay ahead of regulatory changes and contribute to policies that address systemic risks. • Leverage data analytics and AI to identify early-warning signals to better anticipate and respond to emerging crises. • Increase diversification across asset classes, sectors and geographies, while adopting a thematic-driven investment strategy that capitalises on megatrends. • Prioritise resilience through the incorporation of ESG factors into investment and strategic decision-making processes. • Review and update CLI’s Business Continuity Management Framework and conduct regular testing of crisis management plans to ensure a swift and effective response to unforeseen disruptions. • Acceleration in the global transition to a low-carbon economy, and investments in renewable energy infrastructure could lead to biodiversity-related risks, increased capital and operational expenditure, and costs of regulatory compliance. • Convergence of geopolitical instability, economic uncertainty, divergent demographics and climate change creates a volatile and unpredictable environment, which could affect global markets, supply chains and investment opportunities. EMERGING RISKS KEY MITIGATING ACTIONS • Unintended consequences arising from the adoption of Generative AI to enhance customer experience and improve employee productivity, such as AI-enhanced malicious attacks and AI-assisted misinformation. Generative AI Climate-related: Transition Operational Disruptions
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