Section 4 UEM Edgenta Berhad HOW WE CREATE VALUE 64 RISKS AND MITIGATION The Group remains steadfast in its commitment to effectively manage risks, recognising their presence in our business decisions and operations. Thus, effective risk management is crucial in balancing our risk exposure while successfully pursuing our strategic and business objectives. We acknowledge both inherent and external risks in our business, which are addressed through a robust risk management framework. In addition to meeting compliance requirements, we actively embrace policies, principles and practices geared towards minimising risk exposure, optimising performance and fostering steady confidence among stakeholders. We view risks as opportunities to enhance our internal controls, compliance protocols and management strategies. Each identified risk is evaluated based on its likelihood of occurrence and potential impact on our business. The following highlights the main risks we have recognised which may substantially affect our operations. This list is not exhaustive and is not presented in any particular order of importance. While the Board regularly assesses these risks, it also acknowledges the possibility that unforeseen, non-existent or seemingly insignificant risks may emerge as significant in the future. Details of our risk management framework and control processes can be found on pages 238 – 246 under the Statement on Risk Management and Internal Control of this Annual Report. STRATEGIC RISK Context • Our engagement in various countries exposes UEM Edgenta to a range of economic, regulatory, political and social factors that can significantly influence our strategic decisions and day-to-day operations. • Within our operating landscape, competition remains intense. Our clientele, both established and prospective customers, are increasingly shifting their demands from traditional services to those that offer added value, including technological integration, performance-driven models and sustainability initiatives. • Clients, especially those in industries prioritising cost-effectiveness, may occasionally undervalue the importance of our services, despite their necessity. This trend of service commoditisation ultimately results in increased competition primarily driven by pricing. • Market dynamics continue to exert pressure on our profit margins, making it challenging to both expand our revenue streams and sustain a robust order book. Mitigation • Our primary goal is to expand and diversify our market reach through the implementation of the Pan-Malaysia Strategy. This involves penetrating new regions and exploring adjacent sectors to broaden our revenue streams. • We are committed to developing and implementing cutting-edge technology solutions to revolutionise service delivery in both the healthcare and infrastructure domains. Our aim is to establish new standards and benchmarks within these sectors. • We are focused on productising our existing technological solutions and enhancing their scalability to cater to the needs of our current and prospective clients. This will enable us to efficiently meet the evolving demands of the market. • We are dedicated to the ongoing cost rationalisation efforts aimed at driving organisational efficiency. By optimising our product and technology offerings, we aim to enhance our competitiveness in the market. • Our strategy includes expanding our client base through crossselling initiatives and the adoption of performance-based contracting models. Additionally, we remain committed to sustaining our existing concession businesses while pursuing growth opportunities. Strategic risks refer to the fundamental decisions made by the Board and Management of UEM Edgenta relating to the Company’s objectives and exposure to a dynamic market environment and industry demands. These risks have the potential to influence the Company’s business strategy and growth trajectory, posing a threat to achieving its objectives if not mitigated. They stem from the evolving market landscape, including industry uncertainties and emerging issues that could impact various aspects such as strategy execution, performance metrics (e.g., market share and growth), shareholder value and reputation. Strategic risks often require UEM Edgenta to make calculated decisions to expand its business and ensure long-term viability. They represent the inherent challenges and uncertainties associated with pursuing growth while remaining competitive in the marketplace.
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