49
CapitaLand Mall Trust
Annual Report 2015
Overview
Sustainability
Business
Review
Portfolio
Details
Corporate
Governance &
Transparency
The Manager’s ERM Framework sets out the required
environmental and organisational components which
enable it to manage risks in an integrated, systematic
and consistent manner. The ERM Framework and
related risk management policies are reviewed annually
and periodically validated by external ERM consultants.
A robust internal control system as well as an effective,
independent review and audit process are the twin
pillars that underpin the Manager’s ERM Framework.
The line management is responsible for the design and
implementation of effective internal controls using a risk-
based approach while the outsourced Internal Audit
function from CapitaLand reviews such design and
implementation to provide reasonable assurance to the
AC on the adequacy and effectiveness of the internal
control system.
Annually, the Manager facilitates and coordinates CMT
Group’s Risk and Control Self-Assessment (RCSA)
exercise that requires the respective risk and control
owners to proactively identify, assess and document
material risks as well as the corresponding key
controls and mitigating measures needed to address
them. Material risks and their associated controls are
consolidated and reviewed by the Manager before they
are presented to the AC and the Board.
Awareness of and preparedness for potential risks
affecting CMT Group’s business continuity help the
Manager minimise the impact of disruption to business
operations. The Manager has in place a business
continuity plan. In addition, the outsourced Information
Technology (IT) team from CapitaLand has also put in
place a disaster recovery strategy, which is reviewed
and tested annually.
The Manager believes that having the right risk
culture and people with the right attitude, values and
knowledge are fundamental to CMT Group’s success.
Therefore, the Manager works closely with CapitaLand’s
Risk Assessment Group to proactively enhance risk
management knowledge and promote a culture of risk
awareness.
Managing Material Risks
The Manager undertakes an iterative and comprehensive
approach in identifying, managing, monitoring
and reporting material risks across CMT Group.
Such material risks include:
Business Interruption Risk
CMT Group is exposed to business interruption
risk arising from sudden and major disaster event
such as fire, prolonged power outages or other
major infrastructure or equipment failures which may
significantly disrupt operations at our malls or data
centres. The Manager manages such risks through
proactive facilities management (for example, routine
inspection and scheduled maintenance) and having
crisis management procedures at each property.
In addition, the outsourced IT team from CapitaLand
has a defined disaster recovery plan which is reviewed
and tested annually.
Competition Risk
CMT Group faces keen competition from established
players, online businesses and new market entrants
which are likely to affect shopper traffic and tenants’
sales. The Manager adopts a relentless approach
towards strengthening CMT Group’s competitiveness
through optimising tenant mix, differentiating its product
and services offerings, refreshing mall concepts and
asset enhancement initiatives (AEI). The Manager
also promotes tenant and customer loyalty through
customer-centric initiatives and shopper loyalty
programmes to generate sustainable demand for our
retail space.
Credit Risk
Credit risk is the potential volatility in earnings caused
by tenants’ failure to fulfil their contractual lease
payment obligations, as and when they fall due.
The Manager has in place a stringent collection policy to
ensure that credit risk is minimised. In addition to the
requirement for upfront payment of security deposit of
an amount typically equivalent to three months’ rent,
the Manager also establishes vigilant debt monitoring
and collection procedures.
Economic Risk
CMT Group is exposed to developments in economy,
financial and property markets. These developments
may reduce revenue, increase costs and result in
downward revaluation of CMT Group’s assets. Market
illiquidity during a financial crisis makes asset divestment
challenging and this can affect CMT Group’s investment
and strategic objectives. The Manager manages this
by adopting a disciplined approach towards financial
management and having a well-balanced portfolio
across Singapore with majority of its malls being
established as necessity shopping.
Information Technology Risk
IT risk comprises cyber risk, information security
risk and technology infrastructure risk. IT is an
integral part of CMT Group’s business and security
of sensitive information (for example, shopper/
tenant details and financial information) is crucial.
Financials &
Additional
Information
