SECTION 07 pg. 206 AL-SALĀM REIT KEY RISK PROFILES The consolidated analysis of Al-Salām REIT’s risk landscape highlights several key themes that shape the REIT’s overall risk posture and priorities for Board oversight: • Top risks (Retail & Office Market Demand, Tenant Performance including F&B, Asset Valuation, and Acquisition / Asset Growth) represent the most significant drivers of income stability and portfolio performance and therefore require continued Board-level attention. • Financial risks (financing, refinancing, liquidity and rental collection) remain sensitive to interest rate movements and market conditions and will continue to be closely monitored over the medium term. • Operational risks (mall and office operations, health and safety, building integrity and vendor management) are generally well managed but require ongoing oversight and disciplined capital expenditure to sustain asset quality and tenant experience. • Climate-related and ESG risks are emerging as increasingly important considerations, with potential implications for asset resilience, operating costs, regulatory compliance, disclosures and long-term valuation. • Governance, regulatory and Shariah compliance risks remain stable, supported by established policies, oversight structures and control frameworks. The table below presents the top ten risks for Al-Salām REIT, summarising their respective heat map positions, residual risk ratings and the effectiveness of current mitigation measures based on the latest risk assessment. # Risk Risk Rating Mitigation Effectiveness Effectiveness Summary 1 Retail & Office Market Demand Risk (Moderate– Strong) Active leasing and repositioning strategies are in place; however, exposure to macroeconomic conditions and changing consumer and office demand remains significant. 2 Tenant Performance Risk (including F&B) (Moderate– Strong) Tenant screening, diversification and arrears management mitigate risk, but F&B exposure increases sensitivity to cost pressures and consumption trends. 3 Tenancy Renewal & Concentration Risk (Moderate– Strong) Lease expiry profiling and proactive renewals reduce short-term risk; residual exposure remains for anchor tenants and concentrated income streams. 4 Asset Valuation & Impairment Risk (Moderate– Strong) Independent valuations and oversight are robust, but asset values remain exposed to yield movements and retail/office sector sentiment. 5 Acquisition / Asset Growth Risk (Moderate– Strong) Governance, due diligence and Shariah review processes are established; execution risk and market pricing remain key constraints. 6 Financing, Interest Rate & Refinancing Risk (Moderate– Strong) Prudent gearing and established banking relationships support refinancing; residual risk remains from interest rate volatility and funding conditions. 7 Mall & Office Operational Management Risk (Strong) Preventive maintenance, managing agent oversight and KPIs are effective; ageing assets require ongoing capex discipline. 8 Health, Safety & Building Integrity Risk (Moderate– Strong) Safety procedures and statutory compliance are in place; residual risk relates to high-footfall areas and contractor dependency. STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL
RkJQdWJsaXNoZXIy NDgzMzc=