167 GOVERNANCE | STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL Top 5 risks Descriptions Key controls and mitigation in FYE 2024 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 might negatively impact the project profit margins and affect the Group’s cash flows. • Securing adequate funding prior to project initiation. • Continuous review and improvement of project cost management throughout the project phase. • Enhancement and improvement of the Project Standard Procedure for better screening and can be utilised for reference for future projects. Project delay As for the FPSO segment, the entire project phase starting from approval of the Front-End Engineering Design (“FEED”), preparation and review of procurement schedule and project budget, contract review and signing, and finally the construction and commissioning are required to progress according to the project timeline which has been committed to the client. A delay of more than 30% of the project timeline is considered an extreme delay and may pose significant consequences to the Company. Inability to perform the required deliverables as per the stipulated timeline may lead to penalties, Liquidated Ascertained Damages (“LAD”) charges or potential contract termination which could further cause reputational damage to Yinson. • Ensure comprehensive contractor oversight by employing a meticulous tender process, conducting regular progress meetings, and preparing regular Project Expediting Reports. • Stipulate approval turnaround times in contracts for design and change management to minimise project delays. • Contractual safeguards include incorporated remedial periods in the contract to address non-performance and establish clear penalties and liquidated damages to incentivise adherence. CORPORATE COMPLIANCE The Corporate Compliance function was established to oversee the compliance initiatives, compliance monitoring reviews, and reports to the BRSC and Board of Directors. The following subsections describe policy initiatives aimed at strengthening our Corporate Compliance Framework. Compliance Management System Yinson Corporate Compliance function has embarked on an exercise to leverage software solutions in its day-today operations across various aspects of its Compliance Framework scope. At this juncture, the Corporate Compliance function is implementing the following Compliance Management System (“CMS”) modules: 1. Independent Whistleblowing Channel. 2. Third-Party Due Diligence. 3. Training Module for External Parties. The CMS initiative was established with the Corporate Compliance function being cognisant of the need to undertake the scope of the Compliance Framework at hand by efficiently utilising the available resources (i.e. Corporate Compliance team members available) and leveraging on CMS solutions available in the market. With this approach, Corporate Compliance would be able to optimise and find the right balance between the resources available and process automation for group-wide implementation. The implemented CMS is also scalable to meet future Compliance requirements, to optimise resources available and the IT solutions to assist Corporate Compliance work groupwide in a more efficient manner. Whistleblowing & Grievances Yinson encourages all stakeholders including business partners, the general public, employees, third parties and vendors to raise genuine concerns about suspected or possible violations of Yinson’s Code of Conduct and Business Ethics (“COBE”), improprieties in matters of financial reporting, non-compliance with laws and regulations, noncompliance with Yinson’s policies and procedures as well as disclosing any improper conduct or other malpractices within Yinson without fear of unfair treatment or reprisal. The Whistleblowing Policy & Procedure was first established in 2018 and has been regularly updated since then, with the latest revision occurring in 2023. Yinson has enhanced the overall Whistleblowing process by implementing the following initiatives: • Deploying an Independent Whistleblowing Channel whereby a Service Provider that is not related to Yinson will receive all cases escalated from internal and external stakeholders. • The Whistleblowing Channel has been made available in multiple languages to handle escalated reports. This is important as it ensures that Whistleblowers can submit reports or grievances in languages other than English, preventing anyone from feeling unable to escalate issues.
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