YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2024 64 RISKS AND OPPORTUNITIES Yinson continues to safeguard stakeholders’ interests through comprehensive risk management tools and processes that enhance the organisation’s capabilities in navigating uncertainties and capitalising on opportunities to achieve our strategic objectives. This approach facilitates calculated risk-taking by identifying and assessing potential threats and opportunities, besides minimising losses through preventive and recovery measures. The Enterprise Risk Management Policy Statement & Framework serves as the overarching architecture, applied at every level within Yinson to guide the company-wide risk management approach. The Risk Management unit, under the Governance, Risk, and Compliance (“GRC”) Department, has undertaken several initiatives to strengthen and enhance risk management processes across the Group. As in previous years, periodic deep-dive risk review sessions were conducted for Yinson Holdings Berhad, Yinson Production, Yinson Renewables, Yinson GreenTech, and Regulus Offshore. The risk profiles for respective businesses were reassessed and reestablished to ensure the risk profiles remain strategic, forward-looking and in line with the growth and transformation of the organisation. To bolster organisational resilience, the GRC Department is strengthening its Business Continuity Management (“BCM”) processes, which will be a major focus in FYE 2025. The BCM aims to further safeguard Yinson’s critical functions through systematic vulnerability identification, tailored strategy development, and comprehensive response plan implementation and testing. This initiative is expected to enhance Yinson’s ability to manage and recover from potential disruptions while minimising the impact of potential crises. PROJECT COST OVERRUN DEFINITION AND IMPACT OF THE RISK ON YINSON With active project bids and execution in the FPSO segment, Yinson is tied to contractual obligations and required to deliver the contracted scope of work within the agreed contract value. With the growing FPSO market, there are potential risks in executing multiple projects concurrently, especially with resource and manpower management. This could lead to a risk of project cost overruns, affecting the profitability of projects and cash flows for the Group. HOW WE MANAGE OR MITIGATE THE RISK • Adoption of quantitative risk analysis to identify potential risks that may affect estimated cost at completion as well as the potential magnitude of cost overruns to drive targeted mitigation strategies. • Review and improve project specifications to minimise changes and scope growth. • Lessons learned from previous projects are taken into consideration and adopted into new projects. • Secure adequate funding prior to project initiation. MOVING FORWARD (OPPORTUNITIES) • Establish potential frame agreements with major suppliers to achieve better pricing. • Establish technical optimisation to reduce project costs. For more information on Yinson’s approach to risk governance and oversight, refer to the Statement on Risk Management & Internal Controls, on pg 162 - 168.
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