All business operations carry inherent risks. As Capital A has diversified into digital and tech-based businesses, we are aware of new risks that have emerged and have put in place systems to help us identify and manage both existing as well as emerging risks. Our objective is to maintain all risks within our risk appetite so as not to jeopardise our ability to create value. Below, we describe some of our key risks and rate them (on a scale of 1-5, 5 being the most severe) according to their probability of occurrence and potential severity. The aviation industry has been the hardest hit by the pandemic due to the closure of geographical borders. This has severely restricted air travel, specifically international air travel, causing a sharp decline in revenue. In turn, airlines including AirAsia are facing operating cash flow challenges and operating losses which could lead to insolvency. MITIGATION The Group has outlined restructuring plans to deliver cash flow, undertake cost optimisation, secure fundraising and loans, and negotiate lease/payment terms with vendors. We are also monitoring early indicators of travel recovery and actively strategising our next steps accordingly. Pandemic Risk: Financial/Liquidity 1 Rating: As our ai r l ines resume f l ight operations, once again expanding their routes and attracting greater passenger volumes, our exposure to operational safety hazards will increase. MITIGATION The Group has in place a robust Safety Management System (SMS) overseen by our Safety Review Board (SRB) comprising a Chairman, Capital A CEO, Board members, our Chief Safety Officer, and CEOs as well as senior management from across the Group. The SMS creates a safety framework supported by various policies and quality standards that together ensure we meet rigid safety targets. We have also implemented various digital tools enabling us to capture and analyse data for continuous improvement of our safety performance. Further assuring the safety of our airline operations, our AOCs are subject to mandatory safety audits. We have been adhering to the IATA Operational Safety Audits (IOSA) Standards and Recommended Practices, widely recognised as the industry gold standard for airline operational safety and efficiency. Safety Risk 3 Rating: It has been critical to keep our Allstars, guests and other customers safe from the pandemic in order to protect their well-being, as well as our reputation. MITIGATION From the time the pandemic was announced, the Group has adhered to all relevant SOPs across our operations, paying special attention to air travel and delivery services under airasia Super App. Conscientious efforts to protect our guests led to AirAsia being one of the first airlines to be awarded the top 7/7 rating from experts at airlineratings.com in 2020 for upholding the highest levels of safety and operational integrity. We repeated the feat in 2021. Pandemic Risk: Health & Safety 2 Rating: 0 6 2 C A P I T A L A B E R H A D Key Risks and Mitigation
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