50
Ascott Residence Trust
Annual Report 2015
Financial Risk
Ascott Reit is exposed to financial risks including
liquidity, foreign currency and interest rate risks.
The Manager measures and evaluates these financial
risks and continues to focus on instilling financial
discipline and maintaining a strong balance sheet.
For more information on Ascott Reit’s Financial Risk
Management, please refer to the “Financial Risk
Management” section on pages 181 to 194 of this
Annual Report.
Fraud & Corruption Risk
The Manager is committed to the highest standards of
integrity (one of its core values), and has no tolerance
for any fraud, corruption or bribery in the conduct of its
business activities. Consistent with this commitment,
the Manager has 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 misconduct by having a clearly
defined process through which such reports can be
made in confidence and without fear of reprisal.
Information Technology (IT) Risk
IT risk comprises cyber risk, information security risk
and technology infrastructure risk. IT is an integral
part of Ascott Reit’s business and security of sensitive
information (e.g. customers’ personal information and
financial information) is crucial. Increasing threats to
information security such as hacking and website
defacement may pose risk of data leakage and
damage to Ascott Reit’s reputation. Prolonged power
outages or other major infrastructure or equipment
failures may significantly disrupt operations at our
properties or data centres. The outsourced IT team
from CapitaLand has established policies and
procedures to govern IT security, access controls and
data security. Disaster recovery testing is regularly
conducted to validate the system continuity plan.
In addition, network penetration testing is conducted
regularly to check for potential security gaps.
Investment & Divestment Risk
The Manager has established procedures to be
followed when making investment and divestment
decisions. 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.
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 risk assessment, as well as sensitivity
analysis and proposed risk mitigation measures or
control strategies where appropriate.
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 in the
markets that it operates in. 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 management teams that
are supported by local teams who are familiar with the
local conditions and cultures.
Regulatory & Compliance Risk
Ascott Reit, which has a global operating platform,
is subject to applicable and relevant legislation and
regulations of the various markets it operates in.
These include applicable listing, data privacy and anti-
corruption laws and regulations. The Manager has in
place a robust framework that proactively identifies
applicable laws and regulatory obligations and legal
updates, and embeds compliance into its day-to-day
operations.
Enterprise Risk Management
