62 CapitaLand Ascott Trust Risk Management MATERIAL RISKS KEY MITIGATING ACTIONS Geopolitical Instability or political changes in a country, changes in international policies or relations between countries that could lead to sudden changes in regulations and sentiment in major economies and key markets where CLAS operates. • Actively monitor the geopolitical environment, government policies and regulatory changes to anticipate shifts in trade, growth and innovation in our key markets. • Establish good working relationship between local management teams and local authorities to be kept abreast of regulatory and policy changes. • Ensure investments are diversified across asset classes and/or geographies to minimise impact from political events. • Focus on markets where CLAS has operational scale and the underlying political fundamentals are more stable. Investment & Divestment Deployment of capital into loss-making or below-target return investments due to wrong underwriting assumptions or poor execution. Inadequate planning to identify suitable divestment opportunities. • Evaluate all investment and divestment proposals against a rigorous set of criteria which includes potential for value creation and DPS accretion, review key financial assumptions and perform sensitivity analysis on key variables. • Maintain a robust approval process including comprehensive due diligence supported by an inter-disciplinary internal team, and/or local independent consultants to advise on the following aspects: legal, tax, building design, quality, environmental, health & safety and security, and compliance with local laws and regulations. • The Boards review and approve all major investment and divestment decisions. • Identify potential risks associated with proposed projects and the issues that may prevent smooth implementation or attainment of projected outcomes at the evaluation stage and devise action plans to mitigate such risks as early as possible. • Integrate sustainability in the real estate life cycle, from the earliest stage of our investment, redevelopment and divestment processes. Regulatory & Compliance Non-compliance with applicable laws, regulations and rules, relating to tax, data protection & privacy, financial crimes and sanctions in the key markets where CLAS operates. • Maintain a framework that proactively identifies the applicable laws, regulations and rules, assesses the regulatory & compliance risks and embeds compliance risk mitigation measures into day-to-day operations. • Leverage in-house specialised teams in CLI such as legal, compliance and tax, and external consultants to provide advisory services and updates on changes to laws, regulations and rules. • Maintain Group-wide policies and procedures to address the requirements of the applicable laws, regulations and rules such as Personal Data Protection Policy, Anti-Money Laundering and Countering the Financing of Terrorism Policy, Global Sanctions Compliance Policy and Tax Strategy. • Adopt e-learning modules to raise awareness and train employees on ways to avoid or prevent non-compliant behaviour.
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