Annual Report 2019

STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL (CONT’D) ENTERPRISE RISK MANAGEMENT FRAMEWORK The ERM framework standardises the process of identifying, evaluating and managing risks faced by the Group for the Financial Year. The ERM framework covers the following key features: • Roles and responsibilities of the RMC, RMD, Management and departments • Guidance on risk management processes and associated methodologies and tools • Guidance on risk register and controls assessments The Group has established a structured process for risk management and reporting within the ERM framework as follows: • The first line of defence is provided by Management and departments which are accountable for identifying and evaluating risks under their respective areas of responsibilities • The second line of defence is provided by the RMD and RMC which are responsible for facilitating and monitoring risk management process and reporting • The third line of defence is provided by the GIAD which provides assurance on the effectiveness of the ERM framework A key component of the ERM framework is Business Continuity Management and the Group has established business continuity plans which enable it to respond effectively in the event of a crisis and to prevent significant disruption to operations. RISK MANAGEMENT INITIATIVES IN 2019 During the Financial Year, the RMD focused on establishing structure and documentation for ERM across the Group, increasing Management participation in risk management, providing robust risk management education and awareness, and completing targeted business impact analyses and recovery plans testing. A key initiative was the formation of a Management level risk committee (“MRC”) to increase participation by Management in risk management processes. The MRC is tasked to review the key risks of the Group prior to submission to the RMC every quarter. The RMD also identified and established Crisis Management Teams across the Group to respond to business continuity events and conducted business continuity plan exercises for key systems, functions and stations to minimise significant operational disruptions in the event of a crisis across the Group. The Group’s significant risks and mitigation actions are broadly categorised as follows: RISK MITIGATION STRATEGIC RISK Political and Environmental Uncertainty – Political instability, market downturn, natural disasters, health epidemics or other events outside of the Group’s control in countries that the Group operates could affect demand for flights or operations to destinations The Group mitigates this risk through environmental scanning and information dissemination which include monthly market profit reviews and response e.g., launching of low-fare promotions in periods of low demand, fleet reallocation, and capacity management. The Group has also established Crisis Management Teams to respond to and reduce the impact of a crisis on the business. Competition – Intense competition in the market arising from entry of new players in the market, expansion of competitors’ network and fare wars The Group mitigates this risk by strengthening its route network, expanding into greenfield markets to achieve “first entrant” incentives e.g., lower airport charges, and compete and secure market share by offering competitive fares on routes through dynamic pricing. 196 MORE THAN JUST AN AIRLINE >