BRAND AND REPUTATION The Group’s reputation is one of its most valuable assets, playing a major part in the continued success of the business. The assessment of reputational risk, due to its nature, is constantly evolving and dependent on numerous factors at any given point in time, and therefore not possible to define all matters and circumstances which may pose reputational risk, or to set out all the considerations which should be applied as part of the decision-making process. We manage this risk by: a) Undertaking active monitoring of both traditional and social media platforms, aggressively responding to and managing any undesirable situation(s) that may arise. b) Raising the profile of our brands through marketing campaigns and strategic partnerships to build and enhance brand equity. c) Focusing on a customer-centric approach, and monitoring customer satisfaction closely through surveys, gathering feedback, inspections and other forms of engagement. d) Establishing brand standards that are designed to maintain a level of product consistency based on the brand collection to which a hotel belongs, whilst allowing flexibility in order to maintain the personality of the property. e) Striving to avoid any situations and/or actions that could result in a negative impact on our reputation and brand. CLIMATE CHANGE The Group recognises that climate risks are business risks. A focal issue of the Paris Agreement and Singapore Green Plan 2030, climate change is one of the long-term key global risks that can potentially impact the Group’s assets, revenue, operations, supply chain, product design, stakeholder engagement, and investor communication. Aside from physical risks arising from climate change, regulatory transition risks can result in stricter emission standards, increased carbon tax and water pricing, and stricter building design requirements. The Group prioritises ESG communication and reporting to proactively manage rising stakeholder capitalism, investor and consumer activism. In the face of climate change, climate-proofing its buildings for a low-carbon future is key to the Group’s growth strategy. We manage this risk by: a) Pledging net zero whole life carbon for CDL’s new developments and major renovations over which we have direct operational and management control in Singapore by 2030, in accordance with World Green Building Council’s Net Zero Carbon Buildings Commitment. b) Implementing robust climate mitigation and adaptation strategies to accelerate efforts towards a low-carbon business model, such as setting carbon emissions reduction targets validated by the Science Based Targets initiative (SBTi) for a 1.5oC warmer scenario. c) Pushing the envelope in innovative green building technologies to enhance the resilience of its assets against physical and transition risks posed by climate change. d)Measuring and disclosing CDL’s management of climate-related risks using internationally recognised frameworks/ assessments, such as the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, Climate Disclosure Standards Board (CDSB) and CDP. e) Conducting climate change scenario analyses as a means of testing the Group’s strategic resilience against different plausible and science-based climate scenarios. The analysis also covered climate-related risks from the COVID-19 pandemic as well as emerging net-zero regulatory landscapes across five key CDL markets. f) Monitoring supply chain risks to better prepare for the increasing physical and social challenges impacting the Group’s supplies of materials and workers. g) Raising the bar on proactive, transparent and prompt ESG communication and reporting via digital platforms. REGULATORY CHANGES The Group operates in many 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 to such risks. MARKET CONCENTRATION The risk of a significant loss as a result of the poor performance of a single exposure (or Group or related exposure). 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 debt portfolio with both fixed and floating interest rates. 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 monetary assets and liabilities 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’ by matching receipts and payments and making asset purchases and borrowings in the respective foreign currency, where possible. b)Leveraging forward foreign exchange contracts or cross-currency swaps to manage foreign exchange exposures. c) Monitoring foreign exchange risk on a continual basis. OPERATIONAL AND COMPLIANCE RISK The Group’s operations are exposed to a variety of operational risks relating to project management, environment, health and safety (EHS), human capital, data privacy, legal and compliance management. PROJECT MANAGEMENT Though minimal risk has been encountered, the Group remains vigilant against project risks such as schedule delay, cost overrun, build quality, contractor’s capability and performance, as well 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, build quality and time objectives are met and has put 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 the Quality Mark (QM) Assessment System. 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. RISK MANAGEMENT CORPORATE GOVERNANCE 69 68 CORPORATE GOVERNANCE ANNUAL REPORT 2023 CITY DEVELOPMENTS LIMITED
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