CLCT GROUP’S MATERIAL RISKS AND KEY MITIGATING ACTIONS A Group-wide Risk and Control Self-Assessment (RCSA) exercise is conducted annually to identify key material risks, which include new and emerging risks, that CLCT Group faces in delivering our strategic objectives, our respective mitigating measures and any opportunities that we can leverage on. Based on the 2023 RCSA results, the measures that we have taken to mitigate the material risks are set out below: Material Risks Key Mitigating Actions Business Interruption » Exposed to business interruption risk arising from sudden and major disaster events such as fire, prolonged power outages or other major infrastructure failures which may significantly disrupt operations at our malls, business parks and logistics parks. » Proactive facilities management such as carrying out preventive measures by installing Internet of Things (IoT) system to detect interruptions or aircon temperature control as well as routine inspection and maintenance for our properties. » The outsourced Information Technology (IT) team from CLI has a defined disaster recovery plan which is reviewed and tested annually. » Adopt contactless technologies and innovative tech solutions to enhance safety and communication at CLCT Group’s properties. » Regular evacuation exercises involving government authorities. » Future proof CLCT Group’s business through digitalisation of business operations and processes. Climate Related » Physical risks such as rising sea levels, violent storms, long intense heat waves, flash floods and fresh water depletion. » Transitional risks including potentially more stringent regulations and increased expectations from stakeholders. » Detailed assessment of the physical risks in the evaluation of any new acquisitions. » Incorporate shadow internal carbon price in the evaluation of new investment/ capital expenditure decisions. This helps to price in climate-related costs and opportunities, support low-carbon investments, prepare for stringent climaterelated legislation, and avoid stranded assets. » Regularly review CLCT Group’s mitigation and adaptation efforts, which include: • Future proofing our portfolio against changing climatic conditions from the design stage and • Improving the operational efficiency of our properties, setting targets for carbon emissions, water, energy and waste efficiency. » CLI has a well-established Group environmental management system which is externally certified to ISO 14001 in 19 countries. » Take actions to influence decarbonisation along CLCT Group’s value chain, including engaging with suppliers and tenants. » For more information, please refer to CLCT’s Integrated Sustainability Report FY 2023, to be published in mid-April 2024. Competition » Keen industry competition from established players who are able to capture our customers by meeting their expectations or reacting aptly to market trends. » Focusing on capital recycling, capital efficiency and fundraising, to optimise CLCT Group’s capacity to capture opportunities. » Leverage CLCT Group’s strong network of investment and asset management professionals with deep knowledge in multi-sector assets to source for opportunities. » Leverage in-house team of industry analysts to keep CLCT Group on top of latest market trends. RISK MANAGEMENT 106 CAPITALAND CHINA TRUST
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