A robust internal control system and an effective, independent review and audit process are the twin
pillars that underpin Ascott Reit’s ERM Framework. While 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 AC on the
adequacy and effectiveness of the internal control system.
Annually, the Manager facilitates and coordinates the Ascott Reit’s Group-wide Risk and Control
Self-Assessment (RCSA) exercise that requires respective risk and control owners 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 by the Manager before they are presented to AC and the Board.
Awareness of and preparedness for potential risks affecting Ascott Reit’s business continuity helps
the Manager minimise the impact of disruption to its business operations. The Manager has in place
a business continuity plan. In addition, the outsourced information technology team has in place a
disaster recovery strategy, which is reviewed and tested on an annual basis.
The Manager believes that having the right risk culture and people with the right attitude, values and
knowledge are fundamental to Ascott Reit’s success. Therefore, the Manager works closely with
CapitaLand’s Risk Assessment Group to proactively enhance risk management knowledge within
Ascott Reit to promote a culture of risk awareness.
MANAGING MATERIAL RISKS
The Manager undertakes an iterative and comprehensive approach in identifying, managing,
monitoring and reporting of material risks across the Ascott Reit. Such material risks include:
Acts of God and Pandemic
Natural disasters, catastrophic and pandemic events are beyond Ascott Reit’s control. Such events
may adversely affect the economy, infrastructure and livelihood of the people in those countries or
regions and could severely disrupt Ascott Reit’s business operations. The Manager manages such
risks by having a diversified portfolio across geographies. In addition, the Manager has in place a
Business Continuity Plan to respond to any disruption, and each property has standard operating
procedures for crisis management.
Competition Risk
Ascott Reit faces keen competition from other real estate companies or investors and managers of
real estate assets as well as new market entrants in the property industry. The Manager adopts a
relentless approach towards strengthening its competitiveness through high-quality products and
services, product differentiation, speed to market, pricing, asset enhancement initiatives and
branding. The Manager also adopts active asset management to improve the profitability of Ascott
Reit.
Economic Risk
Ascott Reit operates in various countries around the world and is exposed to key financial and
property market developments. 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 Ascott Reit’s investment, financial and strategic
objectives. The Manager manages this by adopting a disciplined approach towards financial
management, having a diversified portfolio across geographies, and focusing on cities where Ascott
Reit or its sponsor, Ascott, has operational scale and where underlying economic fundamentals are
more robust.
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