44 AL-SALĀM REIT MANAGEMENT DISCUSSION AND ANALYSIS KEY RISK FACTORS ANNUAL REPORT 2023 Focus Area Disclosures Credit Control Non-payment of rentals increases the risk of default whilst affecting the cash flow of the Fund. A designated credit control unit monitors debtors ageing to ensure effective and efficient collection of rentals. The Unit undertakes continuous and close engagement with tenants to discuss proposed solutions, e.g., settlement plan. Apart from that, stricter procedures have been put in place which include issuance of reminder letters or letters of demand and initiating legal action against defaulters. Business Continuity The assets are exposed to natural and accidental disasters, such as fire, flood, or weather-related events and cyber-attacks. It is imperative to conduct ongoing assessments to identify potential risks and their potential impact on operations. These assessments will enable the development of proactive measures and procedures to safeguard the business and effectively manage risks. In safeguarding itself from such risk of climate change and accidental disasters, The REIT Manager emphasises on preventive efforts such as: • Ensuring regular upkeep includes checking for leaks and performing electrical inspections that prevent minor issues from escalating into major problems. • Implementing regular M&E inspections and preventive maintenance protocols. • Undertakes adequate and comprehensive commercial property insurance policies to shield against accidents, damage, or legal claims to safeguard financial investment. • Educating the employees, property managers on safety initiatives to ensure property safety, longevity and property value. Apart from that the REIT Manager also put in place the Business Continuity Management (“BCM”) framework which involves assessing Business Impact Analysis should any unforeseen disaster occurs. This involves comprehensive preparation for emergencies, which include developing a clear plan for unexpected events, complete with emergency contacts, evacuation procedures, and essential supplies. Human Capital and Talent Management Ineffective succession planning may affect Al-Salām REIT's operations if a critical role becomes vacant without a successor. Such an occurrence will have an adverse impact on the organisation. There is also the risk that the Manager will be unable to attract and retain a competent staff force to manage its portfolio and execute its strategies for sustainable growth. The JCorp Group is developing a talent pool to ensure comprehensive a succession planning framework in place, which includes the identification of future successors and leadership training for candidates for critical positions. Additionally, the strategic implementation of activities and processes is designed to decrease the likelihood of lengthy vacancies in critical roles and limit the impact of when they do occur.
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