A robust internal control system and an effective, independent review and audit process are the twin
pillars that underpin CRCT Group’s ERM Framework. While the line management is responsible for
the design and implementation of effective internal controls using a risk-based approach, the
outsourced Internal Audit team reviews such design and implementation to provide reasonable
assurance to the AC on the adequacy and effectiveness of the internal control system.
Annually, the Manager facilitates and coordinates CRCT’s Group-wide Risk and Control Self-
Assessment (RCSA) exercise that requires respective risk and control owners to proactively identify,
assess and document material risks as well as the corresponding key controls and mitigating
measures needed to address them. Material risks and their associated controls are consolidated and
reviewed by the Manager before they are presented to the AC and the Board.
Awareness of and preparedness for potential risks affecting CRCT Group’s business continuity helps
the Manager to minimise the impact of disruption to its business operations. CRCT Group has in
place a business continuity plan. In addition, the outsourced Information Techolology (IT) team has
also put in place a disaster recovery strategy, which is reviewed and tested on an annual basis.
The Manager believes that having the right risk culture and people with the right attitude, values and
knowledge are fundamental to CRCT Group’s success. Therefore, the Manager works closely with
CapitaLand’s Risk Assessment Group to proactively enhance risk management knowledge within
CRCT Group and promote a culture of risk awareness.
MANAGING MATERIAL RISKS
The Manager undertakes an iterative and comprehensive approach to identifying, managing,
monitoring and reporting of material risks across CRCT Group. Such material risks include:
ACTS OF GOD AND PANDEMIC
Natural disasters, catastrophes and pandemic events are beyond CRCT Group’s control. Such
events may significantly damage our properties or disrupt our operations and reduce shopper traffic.
This could lead to loss of income for our tenants and possibly defaults on lease payments, resulting
in adverse effect on our business and financial conditions. The Manager manages such risks through
established crisis management standard operating procedures at each property.
COMPETITION RISK
CRCT Group faces keen competition from established players and new market entrants in the
property industry. It adopts a relentless approach towards strengthening its competitiveness through
high-quality products and services, product differentiation, pricing, asset enhancement initiatives
and branding. CRCT Group also promotes shopper loyalty through shopper-centric initiatives and
shopper loyalty programmes.
ECONOMIC RISK
CRCT Group is exposed to economic, financial and property markets developments in major cities
in China. These developments may reduce revenue, increase costs and result in downward
revaluation of our assets. Market illiquidity during a financial crisis makes asset divestment
challenging and this can affect CRCT Group’s investment, financial and strategic objectives. The
Manager manages this by adopting a disciplined approach towards financial management and
having a balanced portfolio.
FOREIGN EXCHANGE RISK
CRCT Group is exposed to Chinese Renminbi (RMB) flutuation against Singapore Dollar which is the
distribution pay out currency. Where possible, CRCT Group adopts a natural hedging by borrowing
in RMB which matches the revenue stream generated from its investments. Non-RMB denominated
Delivering Performance | 45
