UEM EDGENTA BERHAD Integrated Annual Report 2025 66 KEY RISKS AND MITIGATION The Group remains vigilant in managing risks and recognises that risk considerations are integral to all business decisions and activities. Effective risk management is essential not only in mitigating potential exposures but also in supporting the achievement of our strategic and business objectives. Our risk management process systematically identifies, assesses, and manages both inherent and external risks. Beyond regulatory compliance, we adopt comprehensive policies, principles, and practices designed to minimise risk exposure, enhance operational performance, and provide greater certainty, thereby strengthening stakeholder confidence. Risks are viewed as opportunities to reinforce our internal controls, compliance procedures, and management strategies. Identified risks are carefully assessed, mapped against their likelihood of occurrence, and evaluated based on their potential impact on UEM Edgenta’s operations. To support this approach, the Group has established a robust risk management framework that governs our risk management practices, enabling the identification, assessment, and mitigation of risks to ensure continued operational resilience. Further details are set out on pages 243 to 252 of the Statement on Risk Management and Internal Control in this Annual Report. The key risks outlined below, while not exhaustive or listed in any specific order of priority, are those we believe could have a significant impact on our business. While these risks have been thoroughly evaluated, the Board acknowledges that the risk landscape is dynamic and constantly evolving. As such, unforeseen or emerging risks, even those initially perceived as minor, may have the potential to escalate into significant challenges in the future. Description Strategic risks arise from decisions made by the Board and Management of UEM Edgenta in pursuing the Group’s objectives within a dynamic market and evolving industry environment. If not effectively managed, these risks may adversely affect strategy execution, business performance, and long-term growth. These risks stem from external changes such as industry uncertainties, competitive pressures, and emerging challenges, which may impact market share, shareholder value, and corporate reputation. Managing strategic risks requires informed decision-making to support sustainable growth and maintain competitiveness in a rapidly evolving environment and marketplace. R1 STRATEGIC RISK Context Mitigation • Our multinational operations expose us to a broad range of risks, including economic volatility, evolving regulatory landscapes, geopolitical developments, and diverse social contexts. These factors critically influence our strategic decision-making, long-term planning, and operational execution. • The operating landscape remains highly competitive, with existing, new, and prospective customers progressively shifting their expectations from traditional service delivery models towards valueadding offerings. These include technology-enabled solutions, performance-based contracting models, and sustainability-driven services. • Clients, particularly in cost-sensitive industries, may at times underestimate the value of our services, despite their critical importance. This growing trend towards service commoditisation intensifies competition, with pricing often becoming the primary differentiator at the expense of quality, innovation, and strategic value. • Market dynamics continue to exert pressure on our profit margins, making it challenging to expand our revenue stream and sustain a strong and sustainable order book. • Expanding and diversifying our revenue streams through the Pan-Malaysia Strategy, regional growth, and entry into new adjacent sectors, thereby broadening our addressable market and reducing reliance on existing sectors and/or clients. • Committing to developing and deploying innovative technology solutions that enhance and transform service delivery in healthcare and infrastructure, with the goal of establishing new industry performance standards and benchmarks of excellence. • Maintaining a strategic focus on converting our technological solutions into scalable, market-ready products that address the evolving needs of both existing and prospective clients, enabling greater market responsiveness, portfolio optimisation, and sustainable long-term growth. • Undertaking cost rationalisation initiatives aimed at driving organisational efficiency, strengthen competitiveness, and delivering enhanced value through innovative products and technology-enabled solutions. • Expanding our client base through targeted cross-selling initiatives and the adoption of performance-based contracting models. • Remaining committed to sustaining and strengthening our existing concession businesses while actively pursuing growth opportunities both within our traditional markets and in new market segments.
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