The Group’s significant risks and mitigation actions are broadly categorised as follows: RISK MITIGATION A. STRATEGIC Political and Environment Uncertainties Political instability, market downturn, natural disasters, health epidemic and any other events that are outside of the Group’s control in geographical areas where the Group operates that could affect its business operations. The Group mitigates this risk by constantly monitoring information related to areas that can impact its business operation. Such information is used to adjust asset allocation, capacity management and promotions to reduce the potential impact of these risks. The Group has also established Crisis Management Teams that will respond and reduce the impact of a crisis on its business operations. Competition Intense competition in the market place arising from new entrances of players, expansion of competitors’ networks and fare wars. The Group mitigates this risk by strengthening its route network, expanding into greenfield markets which attract “first entrant” incentives such as airport charges and by offering competitive fare adjustments. Reputation and Branding Reputational damage that arises through adverse media publicity and social networks which are caused by consumer grievances or any specific campaigns that bring about any negative sentiments against the Group. The Group mitigates this risk by having a Social Command Centre which operates in real time; to monitor and respond urgently to any adverse media publicity or consumer grievances. Further to that, a media monitoring service is utilised to monitor and notify the Group of any targeted media coverage that could create reputational damage. B. OPERATIONAL System Outages Outages of mission-control systems which are required for the continuity of flight operations. The Group mitigates this risk by developing, implementing and testing the specific backup and failover systems to reduce system outages. The Group has also put in place alternative sites that exist in the different geographical areas in the event these missioncontrol systems fail in any one location. A Business Continuity Management Plan with the relevant Crisis Management Plan has been put into place to ensure this. Value Chain Disruption Failure in the airport systems that supports the aircraft refuelling, baggage handling, immigration, customs and quarantine processes which may lead to significant delays and business operational disruptions. The Group mitigates this risk by constant monitoring and communicating with the airport authorities so that any potential service disruptions can be prevented. The Group does periodic testing at different airports and hubs through its Business Continuity Management Plan to ensure minimal disruptions. 1 8 0 C A P I T A L A B E R H A D Statement on Risk Management & Internal Control (cont’d.)
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