Financial Risks
Ascott Reit is exposed to financial risks including liquidity risk, foreign currency risk, and interest rate
risk. The Manager evaluates these financial risks and continues to focus on instilling financial
discipline and maintaining a strong balance sheet to invest in suitable opportunities. For more
information on Ascott Reit’s Financial Risk Management, please refer to “Financial Risk Management”
section on page 170 of this Annual Report.
Fraud & Corruption Risk
The Manager is committed to the highest standards of integrity (one of its core values), and has in
place a zero tolerance policy for any fraud, corruption or bribery in the conduct of its business
activities. Consistent with this commitment, the Manager has put in place an employee code of
conduct and an anti-corruption policy that reiterates the senior management’s strong stance against
corruption and bribery. Every year, employees sign a pledge to renew their commitment to uphold the
Group’s core values. It also has a whistle-blowing policy to encourage the reporting of suspected
reportable conduct by establishing a clearly defined process through which such reports may be
made in confidence and without fear of reprisal.
Investment & Divestment Risk
The Manager has established procedures to be followed when making investment and divestment
decisions. All major investment and divestment decisions are reviewed and approved by the Board.
The Manager conducts due diligence reviews in relation to any investment or divestment proposal.
Where necessary, third-party consultants with the requisite expertise are engaged to assist in the due
diligence review. Each major investment or divestment proposal must also include a detailed risk
assessment, as well as sensitivity analysis and mitigative measures or control strategies where
appropriate. To ensure that the potential returns of new investments commensurate with the risks
undertaken, the investment and divestment proposals are weighed against a rigorous set of criteria,
which includes potential for value creation and DPU accretion.
Political & Policy Risk
Ascott Reit is exposed to different levels of political and policy risks such as political leadership
uncertainty, inconsistency in public policies, social unrest, change in property regulations, etc. Such
risks may threaten the economic and socio-political environment which may, in turn, affect the
financial viability of Ascott Reit’s investments. To mitigate these risks, investments are diversified
geographically. Overseas operations are managed by experienced managers and teams who are
familiar with the local conditions and cultures.
Regulatory & Compliance Risk
Ascott Reit has global operations and is subject to the laws and regulations of the markets it operates
in. The Manager has in place a framework that proactively identifies applicable laws and regulatory
obligations, and embeds compliance into the day-to-day operations.
Enterprise Risk Management
48 | Ascott Residence Trust Annual Report 2014
