MISC BERHAD INTEGRATED ANNUAL REPORT 2025 08 11 09 05 12 SEC 06 STRATEGIC REVIEW 10 07 13 01 02 03 04 74 www.miscgroup.com 75 www.miscgroup.com #deliveringProgress OUR RISKS AND MITIGATION STRATEGIES 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 across the Group, 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. The MISC ERM Framework safeguards shareholders’ investments and ensures the resilience of the Group’s business operations. It establishes a consistent and structured approach to the identification, assessment, management and reporting of risks across the Group, while also providing assurance to the Management and the Board. In 2025, a comprehensive review was undertaken to identify and assess sustainability-related risks and opportunities, as well as the relevant information required for disclosure. This initiative is in line with the requirements of the National Sustainability Reporting Framework (NSRF), which aims to enhance sustainability disclosures by aligning with international standards, specifically the IFRS Sustainability Disclosure Standards issued by the International Sustainability Standards Board (ISSB). Through this exercise, the risks and opportunities that could materially affect the long-term growth of MISC Group over the short, medium and long-term have been identified and integrated into the Group’s Enterprise Risk Management Framework. This exercise complements the periodic assessment of emerging and business risks that may impact the Group. Risk Trend Upward Downward Stable IMPACT MITIGATION STRATEGIES OPPORTUNITIES Heightened geopolitical fragmentation and policy volatility are reshaping trade flows and corridor risk. Active geopolitical surveillance, contracting strategies and routing flexibility enables the Group to maintain resilience as a credible operator and counterparty, even as conditions evolve • Potential disruptions to global supply chains and volatility in freight and shipping rates • Potential closures of key maritime chokepoints such as the Strait of Hormuz, Suez Canal and the South China Sea • Global economic uncertainty, including oil price volatility and inflationary pressures • 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 RISK TREND Regional conflicts, sanctions, and changing trade policies are driving greater uncertainty in global shipping. The upward trend reflects the impact of these factors on raising geopolitical risks in crucial shipping corridors, impacting asset deployment, operating costs, and investment decisions GEOPOLITICAL RISK R1 Escalating geopolitical instability, including shifts in international relations, regional conflicts and policy actions, may disrupt global trade flows and maritime operations, affecting cross‑border operations, market access and long‑term planning for the Group SP1 SP2 Material Matters: M5 M11 Key Capitals: Strategic Pillars: Operating Environment: E1 E2 E3 E4 E5 Market volatility enables value capture by shaping exposure and asset positioning across market cycles. Through balanced contracted and market positions, optimised fleet deployment, and capital recycling agility, the Group sustains utilisation and financial performance during market disruptions • Active management of contract mix through the pursuit of long-term charters to stabilise cash flows and reduce earnings volatility • Optimise fleet deployment and utilisation to maximise efficiency, including pursuing long-term charters and alternative asset deployment options such as conversions • Undertake fleet rationalisation through the selective disposal or scrapping of older or less competitive vessels • Disciplined capital allocation to align fleet growth and renewal with market conditions and long-term demand trends • Competitive pressure for long-term charters affecting portfolio return on capital • Heightened competition from newer and more efficient vessels entering the market, potentially resulting in underutilisation of assets • Elevated impairment risk for assets that are unable to secure employment in weaker market conditions RISK TREND Global shipping markets continue to experience upward trending volatility, driven by uneven demand recovery and increased vessel availability, arising from expiring long term charters and a surge in newbuild deliveries across selected segments. These factors affect freight rates, utilisation levels and cash flow visibility, increasing earnings and growth sensitivity to market cycles MARKET RISK R2 Uncertainty and volatility in global shipping markets, including shifts in supply demand dynamics, charter market conditions and fleet availability, may affect cash flow predictability, asset utilisation and the fleet competitiveness E1 E3 E6 E7 E2 E4 Operating Environment: Material Matter: M1 Key Capitals: SP1 SP2 SP3 Strategic Pillars:
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