RISK MANAGEMENT
STRATEGIES
The Group has established a framework for risk management to identify, assess and manage
potential risks and opportunities and to assist management in making informed decisions. The
Group adopts a proactive approach to managing risk of financial losses, breaches in legal and
regulatory requirements, negative impact to customers and loss of business opportunities.
The Group regularly reviews the level of risk exposure in the following key risk areas which the
Group operates in:
• Legal and Country Risk
The Group has established subsidiaries operating in different countries. These overseas
subsidiaries are exposed to changes in governmental regulations and unfavourable
political developments, which may limit the realisation of business opportunities and
investments in those countries.
Risks arising from non compliance with applicable laws and regulations are managed with
the assistance of the Group’s external legal advisers. Where the Group is active or has
an operating presence in a foreign jurisdiction, legal counsel from that foreign jurisdiction
is sought where appropriate. The operating head of the business unit is responsible for
compliance with the applicable laws in the country of operations.
The Group’s business operations are also exposed to uncertainties of the global economy
and international capital markets. To prepare for the fluctuations in external environment,
the Board and the management consistently keep themselves up-to-date on the changes
in political and industry regulations so as to implement appropriate measures against any
adverse changes in market conditions in an efficient and timely manner.
• Operational Risk
Operational risk is the potential loss caused by a breakdown in internal process,
deficiencies in people and management, or operational failure arising from external
events. The Group’s operational risk is managed at each operating unit and monitored
at the Group level. Whilst operational risk cannot be eliminated completely, the Group
evaluates the options available by weighing the cost and effectiveness of each measure
taken to minimize risk exposure. The Group has put in place operating manuals, standard
operating procedures, delegation of authority threshold to optimise operational efficiency
and a regular reporting structure for both operational and financial reporting. Independent
checks are carried out by the Group’s Internal Auditors on the Group’s internal controls and
risk management process to ensure their effectiveness and adequacy. Where appropriate,
the Group maintains sufficient insurance coverage for those areas exposed to risks, taking
into account the risk profile of the business in which it operates.
• Financial Risk
The Group’s financial risk management objectives and policies are set out on pages 148
to 157 of this Annual Report. Financial risk includes market risk such as interest rate risk
and foreign exchange rate risk, as well as credit risk and liquidity risk.
• Investment Risk
The Group evaluates any investment proposals for potential ventures and business
acquisitions by conducting due diligence exercises and comparing to benchmarked rate
of return taking into consideration the Group’s level of risk exposure. All investment
proposals are subject to the Board’s approval with post-investment reviews being
conducted to monitor and mitigate the risk of non-performing investments.
ASL Marine Holdings Ltd. /Annual Report 2015
58
