OVERVIEW PERFORMANCE SUSTAINABILITY FINANCIALS APPENDIX 157 156 PERENNIAL HOLDINGS PRIVATE LIMITED ANNUAL REPORT 2025 Risk Management • Uphold and enhance Perennial Holdings’ reputation amongst its stakeholders. The Executive Chairman and Chief Executive Officer (“CEO”), and Management are responsible for ensuring that the ERM framework is effectively implemented across Perennial Holdings. The ERM framework encompasses a five-step risk management process of communication and consultation, establishment of context, risk identification and assessment, risk treatment, as well as monitoring and review. ERM PROCESS The ERM framework is applicable to all business units, and the respective management teams are responsible for reviewing current and emerging risks and ensuring that control measures are adequate and effective. Key risk indicators are established and consolidated at the Group level and are reported to the Board every quarter. Each risk indicator has an established tolerance limit, and Management is responsible for reporting to the Board on their risk mitigation strategies should any of the tolerance limits be breached. The Management, respective Risk Owners, and the Internal Audit Department monitor key risks on an ongoing basis and report to the Executive Chairman and CEO regularly. ERM FRAMEWORK The key objective of the Company’s ERM framework is to: • Safeguard employees and assets • Protect Shareholders’ interests • Ensure informed decision-making for intrinsic value creation PROACTIVE ERM As risk management is an ongoing process, the ERM framework and related risk management system would be reviewed by management when required. Where appropriate, risk management practices would be refined by Management in response to new businesses of the Company, changing business landscapes and operating environment. The Group seeks to enhance its risk management practices in the following ways: Management aims to foster a strong riskawareness culture in Perennial Holdings, which encourages prudent risk-taking in decision-making. A robust internal control system and an effective and independent audit function are the twin pillars that underpin Perennial Holdings’ ERM framework. Management is responsible for the design and implementation of internal controls, which are periodically assessed through internal/external audit reviews. These audit reviews provide the Board with independent assurance on the adequacy and effectiveness of the risk management, financial reporting, internal controls, and compliance systems. Formalised guidelines, such as Perennial Holdings’ Code of Conduct, Code of Ethics, Anti-Money Laundering and Countering the Financing of Terrorism Policy, together with structured monitoring and reporting processes, are also established to promote good values and ethical behaviour among employees, which are key elements of an effective risk management system. Through close collaboration with various stakeholders, Perennial Holdings will continue to refine and improve its ERM framework, systems, and processes to ensure that these remain adequate and effective and that the risks are wellmanaged and monitored. A wellestablished risk management approach will enable Perennial Holdings to capitalise on growth opportunities amid the risks of a dynamic and challenging business environment. RISK APPETITE AND TOLERANCE As with any business ventures, there are inherent risks. In pursuing business opportunities, Perennial Holdings endeavors to ensure that risks taken are not excessive and are appropriate relative to the returns. The Board determines the risk appetite based on the extent of the risks the Group is willing to accept in order to meet its strategic objectives. The risk appetite is expressed through clearly defined and measurable risk tolerance limits. Key risks are closely monitored against the risk tolerance limits and key risk indicators, which measure the exposures for such risks. The Board reviews the risk tolerance limits and key risk indicators annually. Please find the key risks in the table on pages 158 to 160. Building and integrating appropriate tools into risk management system Building a strong risk culture Embedding risk management practices into all decision-making and business processes Continuously reviewing the effectiveness of controls to mitigate risks Ensuring accurate and timely info in risk monitoring Instilling risk accountability and ownership at all levels ENHANCING RISK MANAGEMENT PRACTICES THROUGH: ERM FRAMEWORK Define external and internal environment and parameters in managing risks Determine and describe the risk Understand the causes of risk, potential impact and likelihood of risk occurring Evaluate the risk against predetermined criteria Identify action plans to mitigate risk RISK TREATMENT ESTABLISHMENT OF CONTEXT COMMUNICATION AND CONSULTATION With appropriate stakeholders at all stages of the risk management process MONITORING AND REVIEW Periodic review of risks and risk management mechanisms for timely update and to ensure control mechanisms are adequate Risk Identification Risk Analysis Risk Evaluation RISK IDENTIFICATION AND ASSESSMENT
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