Al-`Aqar Healthcare REIT Annual Report 2020

Strategic Performance 45 Management Discussion and Analysis Focus Areas Disclosures Tenant Concentration Risk The main revenue stream of Al-`Aqar is predominantly from a single tenant namely the KPJ Group. The upside of this lease arrangement is a stable rental income to the Fund, whilst maintaining minimum administrative cost. However, should the lessee/business operator fails to sustain financially, the Fund faces the risk of loss in rental income. The Manager has proposed three mitigation plans should the single tenant decides to cease operation or discontinue its lease agreement. • Source in a replacement lessee or healthcare operator • Re-purpose the building • Divest/dispose the property to third party The decision for the above will depend on the risk assessments of each course of action. Cyber Security Risks Cyber security breaches, for example, can damage a company’s reputation, which is difficult to insure against. Penetration test and IT risk assessment exercise has kicked-off in February 2021 and is expected to be completed in mid-March 2021. The exercise is aimed at ensuring that the cybersecurity and BCM Framework are robust and in place. Disaster Recovery Plan is carried out at least annually. The results are tabled to the Board. Human Capital Risk Succession risk refers to the fact that a critical role will become vacant and cannot be filled satisfactorily, thus posses an unacceptable impact on the organisation. Strategic implementation of activities and processes designed to decrease the likelihood of lengthy vacancies in critical roles, and limiting the impact of vacancies in critical roles when they do occur is critical. A comprehensive programme to develop Succession Framework will be developed. This will involve, among others: a. talent development programme ‐ target participants ‐ program design ‐ roles and responsibilities ‐ nomination process ‐ assessment and selection process ‐ evaluation of participants and program effectiveness b. Role on-boarding c. Retention management d. Capturing and sharing tacit knowledge e. Performance Management