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Notes to the Consolidated Financial Statements31 December 2024ESR Group Limited Annual Report 2024243STRATEGIC REPORTSCORPORATE GOVERNANCEFINANCIAL STATEMENTS44.FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)Credit riskIFRS 9Credit risk is the risk of loss due to the inability or unwillingness of a counterparty to meets its contractual obligation. The Group has no concentration of credit risk from third party debtors. The carrying amounts of restricted cash, cash and bank balances, financial assets included in prepayments, other receivables and other assets in the consolidated statement of financial position represent the Group%u2019s maximum exposure to credit risk in relation to its financial assets.All cash and bank balances were deposited in high-credit-quality financial institutions without significant credit risk.The Group has established a policy to perform an assessment of whether a financial instrument%u2019s credit risk has increased significantly since initial recognition, by considering the other receivables into Stage 1 and Stage 2, as described beloStage 1 %u2014 When other receivables are first recognised, the Group recognises an allowance based on 12 months%u2019 expected credit loss (ECL)Stage 2 %u2014 When other receivables have shown a significant increase in credit risk since origination, the Group recognises an allowance for the lifetime ECLsManagement also regularly reviews the recoverability of these receivables and follow up the dispute or amount overdue, if any. Management is of the opinion that the risk of default by counterparties is low.The Group considers the probability of default upon initial recognition of an asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk, the Group compares the risk of a default occurring on the asset as of the reporting date with the risk of default as of the date of initial recognition. It considers available reasonable and supportive forwarding-looking information.The Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables.Further quantitative data in respect of the Group%u2019s exposure to credit risk arising from trade receivables and other receivables and expected loss allowance provision are disclosed in notes 22 and 23.