58 WASCO BERHAD SECTION 3 VALUE CREATION KEY RISK & MITIGATION OUR KEY ENTERPRISE RISKS & STRATEGIC MITIGATION MARKET RISK 1 2 High 1. The risk to long-term financial performance and valuation stemming from the global energy transition and a structural shift away from the traditional oil and gas sector, which has historically been our core market. As the global energy transition accelerates, there is a risk of a sustained decline in demand for oil-related services. This could adversely affect asset valuations, financial performance, and access to capital as financial markets increasingly favour sustainable investments. Given that our deep expertise and significant asset base are rooted in this sector, strategic diversification remains a critical priority. i. Focus on Natural Gas: We are prioritising projects related to natural gas, recognised globally as a crucial transition fuel with a positive long-term outlook. ii. Diversification into Green Energy: We are actively expanding our presence in green and energy transition sectors, leveraging our engineering expertise to build new revenue streams. Risk Trends and Impacts Mitigation Measures 2. The risk of adverse impacts on investment decisions, customer demand, and currency values due to geopolitical instability and global trade disruptions. Given our global presence, our operations and customer investment cycles are exposed to international political and economic developments. This can lead to project delays, shifts in demand for our services, and financial losses from currency fluctuations. Our global presence and operational agility are key strengths in mitigating this risk. i. Geographic Diversification: Our operational footprint spans multiple regions, dispersing our risk, and reducing dependence on any single market. ii. Cost Optimisation and Agility: We continuously streamline our operations to maintain a competitive cost base and enhance our ability to respond swiftly to market changes. iii. Financial Hedging: We adhere to a disciplined hedging framework to mitigate exposure to currency volatility. Risk Trends and Impacts Mitigation Measures
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