159 GOVERNANCE No Top 5 Risks Descriptions Key Controls and Mitigations in FYE 2023 1. Energy transition risk Energy transition risk in essence refers to the energy sector’s shift from fossil-based resources (e.g. oil, coal, natural gas, etc.) to renewable energy (e.g. solar, wind, hydropower, etc.). Examples of energy transition risk may include climate-related risk pertaining to market demand for fossil fuels, regulatory changes and reputational risks. • Establishment of Yinson’s Climate Goals Roadmap and various key strategies to manage the energy transition. • Expansion and growth of Yinson’s renewables and green technologies business units. • Operationalisation of carbon abatement strategies for carbon-heavy assets (i.e. closed flaring, hydrocarbon blanketing system, combined cycle technologies to maximise energy efficiency and utilising low-emission alternatives for energy source). • Continuous improvements in ESG Rating scores i.e. FTSE4Good Index, Morgan Stanley Capital International (MSCI), Sustainalytics and S&P’s Corporate Sustainability Assessment (CSA). • Provide assurance on the carbon intensity performance for Yinson Production and renewable energy generation for Yinson Renewables. 2. Corporate funding risk Corporate funding risk refers to the risk that the Group may not be able to source sufficient funds (i.e. through equity, right issues, debt funding, etc.) to cover working capital and capital expenditure. Any inability to secure funding may lead to defaults on debt obligations or failure to meet repayment schedules. • Focused corporate finance teams led by the respective business unit CFOs tasked with the funding activities for their respective segments. • To raise loans or any other funding mechanisms to fund existing and future projects through engagement with various financial institutions. • Issuance of RM360 million in nominal value of Islamic notes under its perpetual sukuk wakalah programme. • Securing USD720 million syndicated loan facility for the FPSO Maria Quitèria project. 3. Cybersecurity risk Cybersecurity risk is the probability of the Group’s internal system/applications being exposed to various cyber attacks including hacking, ransomware, phishing, etc. A breach in our internal IT system security may result in financial loss, leakages, or loss of confidential or critical data. • The cybersecurity team is in the process of executing the Cybersecurity Roadmap based on the feedback garnered from the Board and businesses. The Roadmap consists of multiple initiatives which will strengthen the cybersecurity system within the Group. • Continue to enhance its cybersecurity awareness training for the Group. 4 Project cost overrun Yinson is bonded to the contractual obligations and is expected to deliver the required scope of work within the agreed contract value for the FPSO projects. Project cost overruns could have a negative impact on the project profit margins and affect the cash flows of the Group. • Continuous review and improvement of project cost management. • Enhancement and improvement of the Project Standard Procedure for better screening and can be utilised for reference for future projects. Risk Heat Map Risk Impact Insignificant Minor Moderate Major Catastrophic 1 2 3 4 5 Risk Likelihood Almost Certain 5 Medium (5) Medium (10) High (15) Critical (20) Critical (25) Likely 4 Low (4) Medium (8) High (12) High (16) Critical (20) Possible 3 Low (3) Medium (6) Medium (9) High (12) High (15) Unlikely 2 Low (2) Low (4) Medium (6) Medium (8) Medium (10) Rare 1 Low (1) Low (2) Low (3) Low (4) Medium (5) YINSON’S RISK MATRIX Yinson Group Top 5 Risks STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL
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