RISK GOVERNANCE The Board of Directors (the Board), is responsible for the governance of risk, and ensures that Management maintains a sound system of risk management and internal controls, to safeguard the interests of CLCT Group and its stakeholders. Under our risk management approach, the Board, assisted by the Audit Committee (now known as Audit and Risk Committee (ARC)), approves CLCT Group’s risk appetite (risk tolerance) which determines the nature and extent of material risks the Manager is willing to take to achieve its strategic objectives. The Board also regularly reviews CLCT Group’s risk profile, material risks and mitigation strategies, and ensures the adequacy and effectiveness of the risk management framework and policies. CLCT Group’s Management team supports the ARC and Board in terms of risk governance and oversight. In doing so, the CLCT Group’s Management team directs and monitors the implementation and practice of risk management across CLCT Group, including the monitoring of risk exposure through key risk indicators. INTERNAL CONTROLS SYSTEM CLCT Group ERM Framework operates within a risk governance structure based on three lines of defence. First Line Employees have an important role as the first line of defence and are accountable for the effective identification and management of risks that arise from their business activities. Second Line The risk management and compliance departments, as part of the second line of defence, provide oversight and governance over risk management and compliance practices, promote and embed a culture of risk ownership and accountability. Third Line Internal and External Audit, as the third line of defence, review the adequacy and effectiveness of risk management and internal control systems design and implementation so as to provide reasonable assurance to the Board. A Strong Culture of Risk Awareness The fostering of a strong risk culture helps ensure risk management practices are implemented effectively and consistently across CLCT Group. The Manager works closely with the risk management and compliance departments at CLI as well as various specialist support functions, to ensure risk awareness and accountability are ingrained in our culture. In addition, risk workshops are conducted regularly by the second line of defence departments, to enhance the risk management knowledge of our employees and ensure risk management principles are embedded in all decision-making and business processes. Management further reinforces the culture by setting the right ‘tone at the top’, leading by example, and communicating our risk management strategy. ANNUAL REPORT 2023 105 Financials Framework Portfolio Performance Leadership Overview
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