73 Environmental, Social and Governance Report 2023 PILLAR 3: CORPORATE PERFORMANCE Risk Management ENTERPRISE RISK MANAGEMENT The Group’s Enterprise Risk Management (“ERM”) Framework provides a holistic and systematic approach for the identifying, assessing, monitoring and reporting of risks, including topics covered by our ESG Framework. The ERM Framework is designed to be dynamic with the intent of fostering the right risk culture and responds promptly and effectively in the constant evolving business environment. The ERM Framework is adapted from ISO 31000 International Risk Management Standards, COSO Internal Control-Integrated Framework and the Task Force on Climate-Related Financial Disclosures (“TCFD”) recommendations – now under the purview of the International Sustainability Standards Board (“ISSB”). In addition, the Group has developed internal key risk indicators that serve as an early-warning system to highlight risks that have escalated beyond the agreed tolerance levels and its risk exposure, including climate-related indicators. Management has established required follow-up actions to be taken when risk thresholds are breached. The key risks and key risk indicators are reviewed by management and Audit Committee before they are drawn to the attention of the Board. 4th Line of Defence: Board Oversight 3rd Line of Defence: Independence Assurance 2nd Line of Defence: Management and Assurance People Processes Systems Risk Management Compliance 1st Line of Defence: Business Governance/Policy Management Operational Governance Financial Governance Policy Management Internal / External Audit In establishing an organisation-wide risk governance structure, ESR adopts the ‘four lines of defence’ model. This governance model aims to drive risk accountability and ownership at all levels of the organisation, at the same time maintaining the right level of commitment and segregation across stakeholders. The responsibility for risk management is distributed across the organisation, from the front lines to the four lines of defence. Risk owners at the country and business unit level, as well as group senior management, actively participate in these processes. The Group Risk Management department collaborates closely with the risk owners to identify key risks, assess their likelihood and impact on the Group’s business and establish effective controls to mitigate these risks. This collaborative approach ensures comprehensive risk management throughout the organisation. To proactively identify and analyse sustainability-related risks and opportunities, we evaluate material ESG risks and integrate the findings into our operations and risk management framework. During the annual review of ERM Framework, Group Risk Management department had included the environmental likelihood and impact parameters in the risk consequence matrix for risk assessment and prioritization and enhanced the risk management process to include the identification, assessment and management of climate-related risks. Throughout the year, the ESG Committee tracks and examines market trends and indicators with the help of external experts and consultants to ensure that the sustainability-related risks are relevant to our business and to be considered during the review process. When integrating ESG-related risks within the ERM Framework, we have identified sustainability and climate change risk as one of the key risks within our Group risk profile. We have assessed the potential drivers, likelihood of the risk occurring and consequences, as well as mitigating controls that are put in place to keep up with the stakeholders’ expectations with regards to sustainability and climate change. In addition, we consider the impact of emerging risks over a long-term horizon. As the world transitions to a low-carbon economy, climate change poses both physical and transition risks which will have medium and long-term effects on our business. Material changes in risk profiles, activities and controls are regularly communicated to senior management, the Audit Committee and the Board of Directors. These updates are shared during half-yearly board meetings to facilitate comprehensive reviews and discussions. More details on the impacts and mitigation measures to address these emerging risks are included in the Risk Management section in Page 57 to 63 of our FY2023 Annual Report, as well as the Climate Change Resilience section under Pillar 2: Property Portfolio of this report.
RkJQdWJsaXNoZXIy MTIwODcxMw==