CITY DEVELOPMENTS LIMITED ANNUAL REPORT 2021 CORPORATE GOVERNANCE 56 57 RISK MANAGEMENT MANAGING RISKS TO REDUCE UNCERTAINTIES AND MAXIMISE OPPORTUNITIES Managing risk is an integral part of the Group’s business and we continually strive towards best risk management practices. Relevant and material risk issues are brought up to the Audit & Risk Committee (ARC) and the Board to keep them informed in a timely manner. Through the ARC, the Board advises Management on the formulation and implementation of the risk management framework, policies, and procedures to mitigate the risks identifiedwhere required. The Group’s riskmanagement framework provides the principles and guidance for the Group’s risk management activities. CDL’S ERM Framework During the year, the Group’s Enterprise Risk Management (ERM) function implemented several initiatives targeted at strengthening risk management practices which are key elements to our risk management framework. Some of the notable initiatives include: • Conducting customised compliance training sessions covering anti-money laundering / counter-terrorism financing, cyber threat and data privacy, to raise the level of awareness and understanding, as well as improve the capabilities of our first line of defence against such risks. • Enhancing data handling and protection policies, and using technology tools to improve processes to ensure policy enforcement. • Completing a Group-wide risk transfer strategy review, which involves reviewing the Group’s key risk exposures and optimising our global insurance structure for coverage consistency to achieve economies of scale. • Updating the control self-assessment programme, with the assessment targeting risk drivers of identified key risks, to facilitate early identification of control gaps and areas for improvement. • Proactive monitoring of developments related to the impact of the COVID-19 outbreak and adjusting our business continuity plans and measures accordingly to minimise any operational disruptions. The Group’s ERM Framework and initiatives are also rolled out to subsidiary companies and affiliates to ensure that risk management practices are aligned, and all material risk factors are duly considered and adequately addressed. The Group’s ERM function facilitates the alignment process and provides guidance through training and knowledge-sharing sessions to raise employees’ risk awareness and embrace the Group’s risk culture. RISK STRATEGY Our risk strategy is based on the belief that risk management is the responsibility of all employees and that it must be integrated into strategy formulation, capital allocation, decisionmaking, and day-to-day operations. The fostering of strong and sustainable ‘self-driven’ risk culture is guided by defined principles that underpin the ERM operating model. RISK CULTURE Effective risk management requires a strong ‘risk awareness’ culture to reinforce ‘doing the right thing’. Our Management is fully committed to fostering a strong risk-centric culture through setting the appropriate tone at the top and demonstrating strong support for risk management. Our governance structure ensures appropriate oversight and accountability for effective management of risks throughout the Group and is further supported by risk management principles that are embedded in all our decision-making and business processes. RISK APPETITE The risk appetitewas set to define the extent of risks the Group is able and willing to take on to achieve our strategic and business objectives. The purpose of establishing a risk appetite framework is not to limit risk-taking, but to ensure that the Group’s risk profile remains within tolerable boundaries as opportunities are maximised. The risk appetite statements, along with the accompanying risk tolerance limits in both quantitative and/or qualitative terms, are reviewed annually. Four (4) key pillars that serve as the foundation of ERM execution and implementation A top-down and bottom-up approach to manage and report risk throughout the Group Risk Strategy Risk Identification Risk Culture Risk Assessment Risk Appetite Risk Response Risk Governance Risk Monitoring Guiding Principles • Line managers are to own risks and be accountable. • Risk management activities are to hinge not only on processes and systems, but equally on a right mindset and attitude. • Risk management is to be benchmarked against global best practices. • Green Building Policy CDL is committed to incorporating d e c a r b o n i s a t i o n , i n n o v a t i o n , inclusivity, health and wel l-being into the design and operation of its buildings. To provide a safe, healthy and inclusive envi ronment for i ts employees, customers and workers, it is crucial to proactively adopt smart and sustainable building technologies. The 3S Framework built on the three thrusts – Smart, Sustainable and Super Low Carbon wi l l drive CDL’s commitment to reduce its carbon footprint and environmental impact in line with CDL’s net zero whole life carbon buildings commitment and the Singapore Green Plan 2030. • Biodiversity Policy CDL supports Singapore’s “City in Nature” vision towards higher living standards while co-existing with flora and fauna. The Company aims to minimise and mitigate the impacts of its developments on natural habitats CORPORATE GOVERNANCE and to protect wildlife biodiversity. The policy complements Singapore’s “City in Nature” vision and takes reference from national frameworks, such as the new Biodiversity Impact Assessment guidelines set by URA and NParks. • Sustainable Investment Principles (“SIP”) As a responsible developer with a longstanding ESG commitment, the Company is focused on taking proactive action in assessing potential portfolio risks and opportunities for sustainable investment decisions via global ly aligned principles set out in the policy. The SIP is formulated in line with the Glasgow Climate Pact, and aligned with the global best practices laid out in the UN SDGs, UN Principles for Responsible Investment, TCFD and UN Environment Programme Finance Initiative. It also complements CDL’s exist ing ESG policies and guidelines, including the Climate Change Policy, EHS Policy, Green Building Policy, Biodiversity Policy and Human Rights Policy. INTERNAL CODE ON DEALINGS IN SECURITIES The Company has in place an internal code on securities trading which sets out the implications of insider trading and provides guidance and internal regulation with regard to dealings in the Company’s securities by its Directors and employees. These guidelines prohibit dealing in the Company’s securities (a) on short-term considerations, (b) while in possession of unpublished material price-sensitive information in relation to such securities, and (c) during the “closed period”, which will be one month before the date of announcement of the Company’s half year and full-year financial results, and ending on the date of the announcement of the relevant results. The Directors and employees of the Company are notified in advance of the commencement of each “closed period” relating to dealing in the Company’s securities. The internal code on securities trading is available on the Company’s intranet and is easily accessible by all employees.
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