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ESR Group Limited Annual Report 202455STRATEGIC REPORTSCORPORATE GOVERNANCEFINANCIAL STATEMENTS1243Risk Appetite, Tolerance,Attitudes and PhilosophyRisk Reporting Structures, Roles,Responsibilities, CommunicationsRisk Management ProcessIterative and continuous4-Step ProcessKey Risk CategoriesKey AssuranceRiskStrategyRisk GovernanceIdentify AssessManageStrategic | Financial | OperationalCompliance | TechnologyFinancial Governance | Compliance Governance | Operational GovernanceInternal Audit | Delegation of Authority | Whistleblowing | Policy ManagementMonitor& ReportRisk ManagementThe Group takes a proactive approach in having a sound and robust risk management framework that ensures the Group is ready to meet challenges and seize opportunities through risk-informed decision-making. The risk management programme not only plays an integral part of the Group%u2019s business, both strategically and operationally but also aims to create value for ESR%u2019s stakeholders. ESR%u2019s objective is not risk minimisation, but rather the optimisation of opportunities within the known and agreed risk levels set by the Board of Directors (%u201cBoard%u201d).The Group%u2019s ERM Framework provides a systematic approach to identify, assess, monitor, and report risks. It is designed to be dynamic, fostering an effective risk culture and responding promptly and effectively in a constantly evolving business environment. At ESR, the risk management culture involves both top-down oversight from the Board and management and bottom-up engagement from employees. This ensures a risk approach that is aligned with the Group%u2019s business objectives and strategies and also helps the organisation anticipate its risk exposure, with mitigating controls in place to counter threats, while pursuing its objectives.STRONG OVERSIGHT AND GOVERNANCEThe Board is responsible for determining the Group%u2019s overall risk strategy, governance and maintenance of a sound system of risk management and internal controls in accordance with market practices and regulatory requirements. The Board also approves the risk appetite statements, which set out the nature and extent of risks that can be taken to achieve the Group%u2019s business objectives. The Board reviews the adequacy of the resources involved in establishing the risk management framework across the Group and monitors the independence of the risk management function throughout the Group. The Board, supported by the Audit Committee, comprises Directors, whose collective diverse experience and knowledge serve to provide guidance and strategic insights, and oversee the design, implementation and monitoring of risk management within the Group. The Audit Committee comprises three Independent Non-Executive Directors and meets at least twice annually.In establishing an organisation-wide risk governance structure, ESR adopts an ERM Framework which is adapted from ISO 31000 International Risk Management Standards, COSO Internal Control-Integrated Framework and the TCFD %u2014 now under the purview of the ISSB. It provides a holistic and consistent process for identifying, assessing, monitoring and reporting of risks. This framework aims to drive risk accountability and ownership at all levels of the organisation, while maintaining the appropriate level of commitment and segregation across stakeholder groups. The Group Risk Management department works closely with the management to continually review and enhance the risk management system in accordance with market practices and regulatory requirements, under the guidance and direction of the Audit Committee and the Board. Major changes to the ERM Framework, risk policies, risk parameters and terms of references are discussed with the Audit Committee. Over the past financial year, the ERM Framework underwent key refinements, including the enhancement of impact parameter descriptions for risk prioritisation and the establishment of a more comprehensive approach in identifying, assessing, and managing climate-related risks. These updates received the Audit Committee%u2019s endorsement within the same period.