Integrated Annual Report 2021

TECHNOLOGY DEVELOPMENTS Description As the world moves towards automation and digitalisation, there is an acceleration of new technologies in the maritime industry. Along with the potential threat from new non-traditional future shipping disruptors, the Group may face challenges in keeping up with latest technologies for its assets. This may result in the Group losing its competitive advantage and accelerating the obsolescence of existing assets. The fast moving pace of technology development may require significant workforce reskilling. Mitigation/Response • Allocate adequate capital and resource investments into digitalisation upgrades and initiatives for assets, as well as transformation of internal processes and systems to accommodate the fast-changing environment and increasing demand for automation in the industry. • Ensure that new orders/assets are equipped with latest technology (including roadmap for technology upgrades), which are consistent with the assets’ estimated lifespan. • Continuously retool and reskill the workforce in adapting to changes in operational requirements and processes in relation to new technologies. DIGITALISATION AND INNOVATION/CLIMATE CHANGE/PROJECT AND FINANCIAL PERFORMANCE/CUSTOMER SATISFACTION FINANCIAL/PHYSICAL/NATURAL/INTELLECTUAL/SOCIAL & RELATIONSHIP Material Matters: Capitals Affected: Trend: Upward BUSINESS DISRUPTIONS Description The Group continues to face the risk of disruptions to its operations and business due to the uncertainties of a prolonged COVID-19 pandemic which is challenging business processes and continuity. Mitigation/Response • Ensuring effective implementation of our Business Continuity Management (BCM) and Crisis Management Plan (CMP) so that all critical business functions can be resumed promptly in various business disruptive scenarios, including in a pandemic situation. • Continuous monitoring, review and maintenance of the Group’s IT systems and infrastructure to ensure adequate support for evolving business operational needs and requirements towards operations mobility, capacity and capability. • Reviewing contractual obligations for all areas including force majeure to protect the Group’s interest in the event of any unforeseen business disruptions. • Implementing stricter crew change guidelines to minimise the spread of virus onboard vessels, maintaining segregated working areas for each project at the shipyard and providing mental health support to employees via various programmes and initiatives. PROJECT AND FINANCIAL PERFORMANCE/RISK MANAGEMENT/HEALTH AND SAFETY FINANCIAL/PHYSICAL/HUMAN/SOCIAL & RELATIONSHIP Material Matters: Capitals Affected: Trend: Neutral OUR RISKS AND MITIGATION STRATEGIES STRATEGIC REVIEW PROJECT MANAGEMENT Description In line with the Group’s growth agenda, effective project management is essential and should be consistently implemented throughout the various types of projects including new shipbuilding, asset construction, vessels and floaters conversions, delivery of clients’ orders/contracts, and internal process improvements. Ineffective project management may lead to delay in project completion, cost overruns and quality deficiencies which may cause delayed and/or reduced earnings, missed opportunities, reputational loss and litigation cases. Mitigation/Response • Establishing dedicated project management teams for all projects, involving subject matter experts to ensure detailed planning and efficient project implementation. • Ensuring project governance and controls are in place for every project, through the establishment, promotion and adherence to project management procedures throughout the Group. • Carrying out independent project reviews via the Project Risk Assessment (PRA) platform that deliberates risks associated with each project and monitors identified risks as well as the progress of mitigation action plans. PROJECT AND FINANCIAL PERFORMANCE/BUSINESS KNOWLEDGE AND EXPERTISE/CUSTOMER SATISFACTION FINANCIAL/PHYSICAL/INTELLECTUAL/SOCIAL & RELATIONSHIP/HUMAN Material Matters: Capitals Affected: Trend: Neutral ASSET AVAILABILITY, UTILISATION AND MARKETABILITY Description Ineffective management of asset maintenance and operational efficiency may cause breakdowns and prolong off-hire periods. Effective management is essential to mitigate the risk of underutilisation or unavailability of vessels, floating assets and facilities. The Group’s older vessels face increasing competition from new, more advanced and efficient vessels, especially with intensified environment regulations and emission requirements. Failure to keep up with minimum capability demand from clients may result in stranded assets. Mitigation/Response • Implementing and continuously reviewing standard operating procedures on asset operations and maintenance to maintain high asset availability and uptime levels. • Maintaining highly skilled and trained personnel to operate assets at optimal levels. • Continuous reviewing and monitoring of vendors and third-party service providers’ performance to ensure consistent high standards of practice in supporting the Group’s operations and maintenance of assets. • Leveraging on technology and the Internet of Things (IOT) in developing effective maintenance schedules. • Continuous monitoring and assessment of fleet age and efficiency, and rejuvenating the fleet by redelivering or disposing older tonnage. • Investing and exploring new investments in up-to-date systems and technologies to ensure tradability of the fleet. • Continue exploring and establishing partnerships and collaboration opportunities to maximise tradability and utilisation of older assets. PROJECT AND FINANCIAL PERFORMANCE/CUSTOMER SATISFACTION FINANCIAL/PHYSICAL/SOCIAL & RELATIONSHIP Material Matters: Capitals Affected: Trend: Neutral MISC Berhad 80 Integrated Annual Report 2021 MISC Berhad Integrated Annual Report 2021 81

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