Al-`Aqar Healthcare REIT Annual Report 2019

RISK MANAGEMENT Risk management is an integral part of the Manager’s strategic decision making process and managing the operational risks by ensuring consistency of operational procedures and practices within the organisation. The commitment to achieve effective risk management is ultimately driven by the Board, which in turn is implemented by the management team and cascaded to all employees of the Manager. The Enterprise Risk Management Framework which takes full effect starting in 2018 is being implemented and improved from time to time to reflect the changes in the business competitive environments especially pertaining to financial risks. The focuses of the ERM remain as follows:- i. continuously identifying, assessing and monitoring the Fund’s risks; ii. managing and monitoring risks on behalf of its unitholders; and iii. implementing mitigation actions to address such risks. Where functions are outsourced, the Fund’s risk management framework must include:- i. performing due diligence on the nature, scope and complexity of the outsourcing to identify key risk areas and risk mitigation strategies; ii. conducting review of its outsourcing arrangement and identifying new risks which may arise; and iii. analysing the impact of the outsourcing arrangement on the overall risk profile of the Fund, and whether there are adequate measures and resources in place tomitigate the risks identified. KEY RISKS FACTORS RISK RISK DESCRIPTION MITIGATION PLAN Acquisition & Investment Risk Risk of acquiring non yield- accretive assets that will adversely affect investment portfolio. All investment proposals will be assessed thoroughly based on the approved investment criteria. The proposals will be evaluated by the Executive Committee prior to recommendation to the Board and subsequently, due diligence will be undertaken by the appointed professionals. In working out a win-win lease arrangement with the lessee, the Manager is aware of the fact that, in a normal industry life–cycle of a hospital, the first 3 years is a Start-Up period. Profit will start to register during the Growth period where the business will start to turn around and be sustainable in the long run. Al-`Aqar Healthcare REIT 03 STRATEGIC PERFORMANCE 47