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ANNUAL REPORT 2011/2012
i. Operational risk
The Group’s operational risk is managed at each operating unit and monitored at the
Group level. In the case of the Group’s hotel properties, the operating risks are intense
competition from other hotels, over supply of rooms, increase in operating costs,
dependence on business travelers and tourists, recurring need for refurbishment of
hotel properties, terrorism and their resulting effect on travel.
It is recognised that operational risk cannot be eliminated completely and the Group has
to weigh the cost and beneft in managing these risks. The Group maintains suffcient
insurance coverage taking into account the cost of cover and the risk profles of the
business in which it operates. The internal audit team complements the management’s
role by providing an independent perspective on the controls that help to mitigate any
operational risks.
ii. Compliance and legal risk
Besides Singapore, the Group has business operations and properties in Australia and
New Zealand. Compliance risk arises from failure to comply with the laws or regulations
and this failure may result in fnes, bad publicity and suspension of operations. The
operating business heads are responsible to ensure compliance with the applicable
laws and regulations in their countries of operations. The Group identifes and manages
legal risk through effective use of its internal and external legal advisers. The internal
Legal Department assists in identifying, monitoring and providing support necessary to
manage legal risks across the Group.
iii. Financial risk
The Group’s fnancial risk management’s objectives and policies are set out in pages 81
to 87 of the Annual Report under note 4 of the Notes to the Financial Statements.
iv. Investment risk
The Board of Directors and the Executive Committee review all major investment
proposals to ensure that the approved investments will most likely meet the Group’s
internal rates of return.
The Board believes that the system of internal controls to safeguard the shareholders’
investments and the Group’s assets throughout the year is adequate.
Corporate Governance Statement