CITY DEVELOPMENTS LIMITED ANNUAL REPORT 2021 CORPORATE GOVERNANCE 60 61 Regulatory Changes The Group operates inmany jurisdictions and is exposed to various levels of political and policy risks such as political uncertainties, introduction or change in public policies, statutory and regulatory requirements. We manage this risk by: a) Actively engaging with regulatory bodies and professional firms on updates to laws and regulations. b) Continuous monitoring and assessment of impact arising from regulatory changes, observing market reactions, and formulating our strategies accordingly. Treasury and Financial Risk Given the Group’s diversified global businesses, the Group is exposed to market concentration, liquidity, interest rate and foreign currency risks. We have established policies, guidelines and control procedures to manage and report exposure of such risks. Market Concentration The risk of a significant loss as a result of the poor performance of a single exposure (or group of related exposures). We manage this risk by: a) Monitoring and maintaining our geographical and asset concentration exposure in accordance with our risk appetite and tolerance. b) Active management to ensure that our portfolio of assets, investments and businesses are diversified against the systemic risks of operating in a specific geography. Liquidity The Group’s ability to meet short-term financial obligations. We manage this risk by: a) Monitoring and maintaining a level of cash and cash equivalents and credit facilities. b) Having in place Medium-Term Note (MTN) programmes to provide a further avenue to support planned growth and investment opportunities. c) Maintaining a healthy gearing ratio. Interest Rate The interest rate risk carried by the Group relates primarily to interest-bearing financial assets and debt obligations. We manage this risk by: a) Maintaining a balanced debt portfolio with both fixed and floating rates of interest. b) Leveraging on interest rate derivatives to hedge against interest rate exposure for specific underlying debt obligations after considering prevailing market conditions. Foreign Exchange The Group is exposed to foreign currency fluctuations arising from sales, purchases and borrowings that are denominated in a currency other than the respective functional currency of the Group’s entities. We manage this risk by: a) Pursuing ‘natural hedges’ bymatching receipts and payments andmaking asset purchases and borrowings in matching currencies, where possible. b) Leveraging on forward foreign exchange contracts or cross-currency swaps to manage foreign exchange exposures. c) Monitoring foreign exchange risk on a continual basis. For more information on the Group’s Financial Risk Management, please refer to the Financial Risk Management section on page 217 of this annual report. Operational and Compliance Risk The Group’s operations are exposed to a variety of operational risks relating to project management, environmental, health and safety (EHS), human capital, data privacy, legal and compliance management. Project Management TheGroup continues to remain vigilant against project risks such as schedule delay, cost overrun, quality, contractor’s capability and performance, aswell as contract disputes, that will affect our reputation and sales. We manage this risk by: a) Allocating appropriate attention to technically challenging and high-value projects. b) Adopting a systematic assessment and monitoring process to identify and manage the key risks for each project. The Group adopts a rigorous project management process to ensure that project cost, quality and time objectives aremet, and also has in place stringent pre-qualification and tendering procedures to appoint well-qualified vendors. Regular site visits are also conducted to closely monitor the progress of projects and manage potential risks of delays, poor workmanship and cost overruns. c) Benchmarking our quality assurance processes against industry standards. We voluntarily subscribe to the BCA Construction Quality Assessment System (CONQUAS) and Quality Mark (QM) Assessment System. RISK MANAGEMENT Environmental, Health and Safety (EHS) The Group is committed to be a socially and environmentally responsible organisation that advocates for a ‘Safe and Green’ corporate culture. In this regard, it is paramount that the Group maintains high environmental, health and safety standards across the Group, particularly at the operational level. We manage this risk by: a) Continuing the longstanding commitment to EHS since the implementation of the CDL EHS Policy in 2003. b) Maintaining an integrated ISO14001and ISO45001Environmental, Health andSafetyManagement System (EHSMS) across all key operations in Singapore, to manage the environmental impact of our operations and the safety, health andwell-being of employees, workers, homebuyers, tenants and building users. The hotel operations, where possible, also align policies and procedures with the requirements of best practice accredited systems. c) Monitoring contractors’ on-site EHS performance through an independent audit tool – CDL 5-Star EHS Assessment System. d) Maintaining robust EHS practices for our managed assets to provide safe, conducive and eco-friendly environments for building users. e) Practising responsible supply chain sourcing as part of our commitment to reduce the Group’s environmental footprint. f) Cultivating an EHS-centric culture amongst internal and external stakeholders through periodic workshops and trainings as well as regular communications to ensure that they are kept updated on EHS best practices. Human Capital As we seek new avenues of growth, a key differentiator alongside access to innovation will be the ability to attract and retain talent, including new skills and capabilities to stay future-ready. The loss of some or all our key executives or the inability to attract or retain the right people, could material ly and adversely affect our business in the medium to long-term. We manage this risk by: a) Benchmarking and reviewing the competitiveness of our remuneration package on a periodic basis. b) Investing inhuman capital development of our existingworkforce, aswell as current andemerging capabilities through professional hires and targeted recruitment. c) SettingupanEnterprise InnovationCommittee (EIC) topromote cross-department engagement, empowering employees to be innovative and share their ideas through in-house programmes to yield a capable and more agile workforce in support of business goals. d) Conducting Employee Engagement Surveys, to help enhance existing policies, better address employee concerns, and introduce targeted initiatives to make CDL a better workplace. e) Rolling out leadership development programmes to groom talent and establish succession planning for key positions. Data Privacy The Group recognises that data privacy breachesmayunderminecustomer confidence and result in litigation from customers and/ or regulatory fines and penalties. We manage this risk by: a) Adopting a pragmatic ‘Data-light, Data-tight’ approach in our business conduct. b) Adopting a risk-based approach to data protection. c) Conducting awareness training to ensure that employees who directly and/or indirectly handle personal data in the course of their work are cognisant of data protection principles and are equipped with the right knowledge to carry out good data protection practices in their day-to-day activities. d) Ensuring compliance with data protection requirements by our data processors. For more information on howwemanage personal data, please refer to our data privacy policy on our websites. Group Data Privacy Policy https:/cdl.com.sg/privacy-policy Millennium and Copthorne Hotels Limited’s Privacy Policy https:/www.millenniumhotels.com/en/utilities/privacy-and-cookie-policy/privacy-and-cookie-policy/ Compliance The Group operates in many jurisdictions and is subjected to applicable laws and regulations of the markets in which we operate, such as anti-bribery, corruption, money laundering, terrorism financing, competition and data privacy, along with all other laws and regulations applicable to licensing and conducting of sales, leasing, construction, property development, asset management and hotel operations. Inaddition, various aspects of hotel operations are required to achieve compliance with the Payment Card Industry Data Security Standards (“PCI-DSS”), and failure to do so could result in penalties and/or withdrawal of credit card payment facilities. We manage this risk by: a) Maintaining a zero-tolerance policy and ‘tone from the top’ towards compliance, including that of fraud, bribery and corruption. The Group currently benchmarks our practices against SS ISO 37001 to ensure that gaps are minimised, and our practices are in accordance with industry standards. b) Conducting training sessions and adopting e-learningmodules to raise awareness and train employees on ways to avoid or prevent non-compliant behaviour. An annual e-declaration exercise is to be completed by all employees, to acknowledge that they have read and understood, and agree to abide by, the Group’s policies. c) Maintaining effective whistleblowing reporting and communication channels for employees, contractors, customers and stakeholders of the Group to report any unethical, fraudulent or corrupt practices, in good faith, without fear of retaliation, for investigation and action subject to applicable laws. d) Establishing platforms and channels to proactively monitor and identify applicable laws and regulatory obligations and embed compliance into policies and operating procedures. e) Aligning our policies and procedures as reasonable and practical with the requirements of best practices accredited frameworks, systems and industry standards.
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