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CapitaLand Limited
Annual Report 2015
Overview
Sustainability
Business
Review
Portfolio
Details
Corporate
Governance &
Transparency
The Group’s ERM Framework sets out the required
environmental and organisational components which enable
the Group to manage risks in an integrated, systematic and
consistent manner. The ERM Framework and related risk
management policies are reviewed annually and periodically
validated by external ERM consultants.
A robust internal control system and an effective, independent
review and audit process are the twin pillars that underpin
the Group’s ERM Framework. While the line management is
responsible for the design and implementation of effective
internal controls using a risk-based approach, the Internal
Audit function reviews such design and implementation to
provide reasonable assurance to the Audit Committee (AC)
on the adequacy and effectiveness of the internal control
system.
Annually, the RAG facilitates and coordinates the Group-
wide Risk and Control Self-Assessment (RCSA) exercise
that requires business and corporate executive leaders to
proactively identify, assess and document material risks
as well as the corresponding key controls and mitigating
measures needed to address them. Material risks and their
associated controls are consolidated and reviewed at the
Group level before they are presented to the RC, AC and
the Board.
Awareness of and preparedness for potential risks affecting
its business continuity help CapitaLand minimise the impact
of disruption to its business operations. The Group has
a Business Continuity Management Policy to guide the
business units in the implementation of business continuity
plans. The Information Technology (IT) team has also
formulated a disaster recovery strategy, which it reviews and
tests annually.
CapitaLand believes that having the right risk culture
and people with the right attitude, values and knowledge
are fundamental to the Group’s success. Therefore, the
RAG continues to proactively enhance risk management
knowledge within the Group to promote a culture of risk
awareness by conducting survey and regular workshops for
all levels and functions.
Managing Material Risks
CapitaLand undertakes an iterative and comprehensive
approach in identif ying, managing, monitoring and
reporting material risks across the Group. Such material
risks include:
Competition Risk
The Group faces keen competition from established
players and new market entrants in the real estate industry.
It adopts a relentless approach towards strengthening its
competitiveness through high-quality products and services,
product differentiation, pricing, asset enhancement initiatives
and branding. The Group also promotes tenant and customer
loyalty through customer-centric initiatives and shopper loyalty
programmes. A team of in-house experts provides regular
analysis on market trends. Regular innovation workshops are
conducted to brainstorm ideas to anticipate as well as to react
to these trends.
Economic Risk
CapitaLand is exposed to developments in major economies
and key financial and property markets. These developments
may reduce revenue, increase costs and result in downward
revaluation of our assets. Market illiquidity during a financial
crisis makes asset divestment challenging and this can affect
CapitaLand’s investment and strategic objectives. The Group
manages this by adopting a disciplined approach towards
financial management, having a diversified portfolio across
geographies with established Board-approved country
concentration limits, and focusing on cities where the Group
has operational scale and where underlying economic
fundamentals are more robust. A team of in-house experts
monitors the macro-economic environment and advises
senior management and the SBUs on future macro-economic
trends and their implications on the property markets.
Scenario analysis is performed to calculate potential value
deteriorations by applying an in-house developed Value-at-
Risk (VaR) model.
Environmental, Health & Safety Risk
CapitaLand recognises the importance of having an
Environmental, Health and Safety (EHS) Management System
to manage EHS risks faced in its development projects and
global operations. Its EHS Management System is externally
audited and has achieved ISO 14001 and BS OHSAS 18001
certification across 15 countries.
Financials &
Additional
Information
