RISK GOVERNANCE The Boards of Directors of the Managers (the Boards) are responsible for the governance of risk and ensure that the Management maintains a sound system of risk management and internal controls, to safeguard the interests of CLAS and its stakeholders. Under our risk management approach, the Boards, assisted by the Audit and Risk Committee (ARC), approve CLAS’ risk appetite (risk tolerance) which determines the nature and extent of material risks CLAS is willing to take to achieve its strategic objectives. The Boards also regularly review CLAS’ risk profile, material risks and mitigation strategies, and ensure the adequacy and effectiveness of the risk management framework and policies. The Management supports the Boards and the ARC in terms of risk governance and oversight. Management directs and monitors the implementation and practice of risk management across CLAS, including the monitoring of risk exposure through key risk indicators. INTERNAL CONTROLS SYSTEM The ERM Framework operates within a risk governance structure based on three lines of defence. Third Line Internal and External Audit, as the third line of defence, review the adequacy and effectiveness of risk management and internal control systems' design and implementation to provide reasonable assurance to the ARC and the Boards. First Line Employees play an important role as the first line of defence and are accountable for the effective identification and management of risks that arise from their business activities. Second Line The risk management and compliance departments, as part of the second line of defence, provide oversight over risk management and compliance practices, as well as promote and embed a culture of risk ownership and accountability. A Strong Culture of Risk Awareness The fostering of a strong risk culture helps to ensure that risk management practices are implemented effectively and consistently across CLAS. The first and second lines of defence work closely to ensure risk awareness and accountability are ingrained in our culture. In addition, risk workshops are conducted regularly by the risk management and compliance departments, as part of the second line of defence, to enhance the risk management knowledge of our employees and ensure risk management principles are embedded in all decision-making and business processes. The Management further reinforces the culture by setting the right ‘tone at the top’, leading by example, and communicating our risk management strategy. RISK MANAGEMENT 88 CAPITALAND ASCOTT TRUST
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