A L - S A L Ā M R E I T A N N U A L R E P O R T 2 0 2 1 56 MANAGEMENT DISCUSSION AND ANALYSIS RISK MANAGEMENT Focus Area Disclosures Outsourcing Arrangement Risk Credit Control Cyber Security Risks Human Capital Risk Debtors ageing has exceeded the 90-days limit. Non-payment of rentals increases the risk of default whilst affecting the cash flow of the Fund. The Manager has put in place a credit control policy and will enforce its implementation. This include: • Having a designated credit control unit • Credit control assessment prior to signing the lease agreement • Securing a higher deposit, depending on asset type and credit control assessment report The Manager outsources certain core functions such as property management, maintenance and services and leasing to appointed Property Manager and Service Manager. Rise in tenants’ number of complaints, failure in securing good tenants and providing good tenancy mix, inefficiencies property management, data errors in management reports and increase in the frequency of machinery/equipment breakdown are consequences of inadequate monitoring. Close monitoring services and performance is required to ensure outsourced service providers perform their duties. The monitoring mechanisms include: • Annual evaluation of outsourced service providers and tabling the evaluation report to the Board of Directors • Compliance to establish standard operating procedure • Internal audit report • Monitor the number of complaints and time taken to resolve issues • Conduct tenants satisfaction survey Cyber security breaches, for example, can damage a company’s reputation, which is difficult to insure against. The Business Continuity Management (BCM) drill/ testing that focuses on IT infrastructure is undertaken annually, and the Company undertook an IT Risk assessment and Penetration Test which was concluded on 12 April 2021. Succession risk which refers to the fact that a critical role will become vacant and cannot be filled satisfactorily; thus, poses 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. The Manager tabled its succession planning framework at the Board meeting and obtained approval of the Board at the Board meeting on 2 December 2021. The framework includes identification of future successors and leadership training for candidates of critical positions.
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