INTEGRATED ANNUAL REPORT 2024 64 65 SECTION 6: STRATEGIC REVIEW www.miscgroup.com MISC BERHAD Our Material Matters Our Risks and Mitigation Strategies In a dynamic environment, risk management is a core element of our business operations and decision making. A comprehensive strategy is embedded across the Group, guiding us in navigating the risk landscape while ensuring a balanced approach between the risks we take and the rewards we gain from our business opportunities and performance. In MISC, the Enterprise Risk Management Framework enables a consistent and structured approach to identifying, assessing and managing risks effectively, taking into consideration a holistic view of the risk profiles of our respective businesses, MISC 2030 Ambition and the macro environment in which we operate. For further details on the Group’s risk management framework, please refer to our Statement on Risk Management and Internal Control on page 192. Material Matter Description Our Approach Sustainability Strategic Priorities Digitalisation Accelerate digitalisation to foster adaptability, data-driven decisions and innovative customer service across business operations • Transform internal processes and systems organisation-wide to enhance productivity and efficiency • Continue leveraging cutting-edge, eco-efficient technologies via our newbuilds/new assets to address market competition and maintain a competitive advantage • Upskill and reskill our workforce to adapt to new technologies Financial Pillar Key Capitals: Risks: SDG P H F I Energy Transition and Decarbonisation Risk Asset Integrity and Performance Risk Talent Risk Cybersecurity Risk Cybersecurity Safeguard MISC’s and stakeholders’ critical data for business continuity Strengthen cybersecurity governance and foster a culture of compliance through training to improve capabilities and awareness, thereby reducing security risks Governance Pillar Governance and Business Ethics Key Capitals: Risk: P H F I SDGs Cybersecurity Risk Community Investment Contribute financially, non-financially and through employee volunteerism to promote social equity in our communities Implement multi-stakeholder community initiatives and promote programmes focused on youths to cultivate interest in the maritime industry Social Pillar Community Investment Key Capitals: Risk: F SR Talent Risk SDG Diversity and Inclusion Grow a diverse workforce that fosters creativity and innovation with fair hiring and promotion policies • Establish strategic priorities to grow our diversity in gender, nationality and multi-generations • Build an inclusive culture and work environment and drive leadership accountability Social Pillar Talent Excellence Key Capitals: Risk: Talent Risk SDGs SR H Escalating tensions beyond regional borders continue posing threats to business operations and growth opportunities Risk Movement Geopolitical risk remains on an upward trend, affecting business strategies and opportunities due to regional conflicts, economic and trade sanctions Impact on Value • Potential disruptions to supply chain and volatility in the freight and shipping rates • Potential closures in key chokepoints, such as the Strait of Hormuz, Suez Canal and potentially, South China Sea • Global economic threat, oil price volatility and inflation Mitigation Strategies • Continuous monitoring and assessments conducted to evaluate readiness for alternatives and to manage dependencies from high risk supply chains • Restricting vessel entry into high-risk areas • Performing security risk assessments, following industry transit advise and equipping vessels with armed guards, if required GEOPOLITICAL RISK Key Capitals F H P Material Matters Financial Performance Values, Governance and Business Ethics Sustainable Supply Chain Health and Safety Security Transition towards new energy and low-carbon solutions aligned with the Group’s strategic direction, as well as growing emphasis on climate change and environment-related regulations Risk Movement Legislation and stakeholders continue to exert pressure to shift and drive the need to proactively assess opportunities for growth in the new energy space Impact on Value • Reduced competitive advantage due to escalating challenges in meeting stakeholders’ environmental expectations and requirements • Asset obsolescence and an increase in capital expenditure • Fines, penalties and legal actions from non-compliances • Inability to meet the cash flows from operations target from new energy solutions Mitigation Strategies Actively pursuing future low-carbon solutions, while reducing the carbon footprint of our operations through: • Selective monetisation of assets and investments into dual-fuel conventional assets and pivot to new energy • Collaborate with strategic partners to pursue opportunities in new energy • Expand new energy assets, with a focus on developing and investing in hydrogen (H₂) and CCS value chains • Implement decarbonisation strategies across current portfolios ENERGY TRANSITION AND DECARBONISATION RISK Key Capitals F H P I N Material Matters Financial Performance Sustainable Supply Chain Climate Change Energy Management Ocean Health Digitalisation
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