STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL The Manager plans and executes activities to ensure that the risks inherent in the management of the Fund are identified and effectively managed to achieve an appropriate balance between realizing opportunities for gains while minimizing losses to the Fund. The Board adopted the enhanced ERM Framework. The ERM Framework was enhanced with the Group’s risk profiles being updated and action plans formulated and monitored focusing on principal business risks. It also identified the ERM reporting structure and frequency of reporting, the responsibilities of the Board Committees for ERM, and the key elements of the risk assessment process and also specifies the level of risk tolerance expressed through the use of a risk consequence and likelihood matrix. Identified key risks of the group were assessed and recorded in the risk profiles under specified categories as shown below. On 1 December 2022, the Board approved the reclassification of Risk Category to include ESG Risk, Market Risk and Partnership Risk in the ERM Policy & Framework. SCOPE, CONTEXT, CRITERIA Risk Treatment RECORD AND REPORT COMMUNICATION & CONSULTATION MONITORING AND REVIEW Risk Identification Risk Analysis Risk Evaluation RISK ASSESSMENT ENTERPRISE RISK MANAGEMENT (ERM) FRAMEWORK ENTERPRISE RISK MANAGEMENT (ERM) FRAMEWORK (CONT’D) Strategic Risks Any risk arises due to potential failures in strategic planning, which may lead to a company not achieving its objectives and goals. Financial Risks Any risk arises due to the potential loss incurred and will impact the cash flow, revenue, operating expenditure (OPEX) & capital expenditure (CAPEX) and profitability of the company. Operational Risks Any risk arises of loss resulting from ineffective or failed internal processes, people, systems, or external events that can disrupt or delay the business operation. AL-`AQAR HEALTHCARE REIT ANNUAL REPORT 2022 120
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