103 The Group adopts Enterprise Risk Management (ERM) as a proactive management system to identify emerging risks and implement pre-emptive action plans so that the effect of uncertainties on fulfilling business goals and objectives are minimised. Sustainability and climate risks are managed with rigour and discipline as with any other business risks. Oversight of sustainability risks is further strengthened by the Sustainability Committee, led by Group CEO. Sustainability risks are assessed, and relevant metrics are monitored as part of the Group’s quarterly risk report. Sustainability has been integrated into our ERM framework, ensuring that critical issues to the Group are systematically assessed and managed based on defined risk rating criteria of likelihood and impact. This approach allows us to compare sustainability issues with other business risks and prioritise resources to manage risks. Furthermore, the Group acknowledges that climate change increasingly poses significant financial risk to our business. This includes the risks and opportunities presented by rising temperatures, climate-related policy, and emerging technologies in our changing world. We are preparing to adopt the IFRS Sustainability Disclosure Standards by 2025, beginning with IFRS S2 Climaterelated Disclosures to enable us to effectively evaluate climate-related risks, make better-informed decisions on capital allocation and improve our short-, medium- and long-term strategic planning capabilities. In 2024, we initiated climate scenario analysis to gain a deeper understanding of how different future scenarios could affect our operations. These analyses will help us identify priority areas for action and develop adaptive strategies to respond to evolving climate conditions. As we progress, we are committed to refining our understanding and approach, ensuring a balanced, data-driven, and practical response to climate-related challenges, while aligning with our broader sustainability objectives. For more information on our sustainability initiatives, refer to our standalone Sustainability Report. The Group has in place a Risk Management Framework aligned to Standard ISO 31000:2018 Risk Management – Guidelines and adopting good practices from the Committee of Sponsoring Organisations of the Treadway Commission’s (COSO) Enterprise Risk Management (ERM) Framework. The framework encompasses practices relating to the identification, assessment and measurement, response, and action, as well as monitoring and reporting of the strategic and operational control risks pertinent to achieving our key business objectives. This framework is continuously enhanced to remain relevant and resilient in ensuring effective management of risk. The IHH Business Resilience Policy integrates globally recognised standards, including ISO 22301:2019 for Business Continuity Management Systems and ISO 22361:2022 for Crisis Management, further strengthening our approach to resilience. Our framework and policies are reviewed periodically to ensure the effectiveness, adequacy and integrity of the Group’s risk management and internal control systems. Step Description 1. Context Setting Understand the business’s strategy, value drivers, and potential risk in the context of the industry, value chain, and stakeholder expectations 2. Risk Identification Define potential risks and uncertainties that could positively or negatively affect the business’s goals and evaluate their impacts and vulnerability to those impacts 3. Risk Assessment & Prioritisation Determine the critical risks facing the business at the enterprise-level 4. Risk Response Develop and implement plan to respond to a risk; Understand its root causes, including the development of Key Risk Indicators (KRIs) to help monitor how the risk changes over time 5. Risk Monitoring & Reporting Track priority risks and engage in routine discussions with leadership on the status and impact of risk treatment plans Proactive, Robust & Consistent Context Setting Monitor & Report Respond Assess & Prioritise Identify 1 5 4 3 2 Read more on Principal Risks on page 56
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