The Board meets regularly to review the financial
performanceof theManager andCITagainst thepreviously
approved budget, taking note of any significant variances
for quarter-on-quarter and year-to-date performance.
In assessing business risks, the Board takes into account
the economic environment and risks associated with the
property industry.
The Board also reviews the risks to the assets of CIT,
examines the management of liabilities, and will act upon
any comments from internal and external auditors of CIT.
Given the importance of compliance and risk
management, the ARCC has been tasked to oversee
this aspect of the Manager and CIT’s operations.
The ARCC reviews and assesses the adequacy of the
Manager’s financial, operational, compliance, information
technology controls, risk management policies and
systems established by the Management. The ARCC also
oversees the establishment and operation of the risk
management system, including reviewing the adequacy
of risk management practices for material risks, such
as commercial and legal, financial and economical,
operational and technology risks, on a regular basis; and
reviews major policies for effective risk management.
RISK MANAGEMENT AND INTERNAL CONTROLS
The Manager has put in place a system of internal controls
to safeguard CIT’s assets, Unitholders’ interests and to
manage risk in general.
Enterprise-wide Risk Management (“ERM”)
An ERM framework has been implemented to further
enhance risk management capabilities. The following
key risks, with the relevant risk appetite threshold are
continually identified, reviewed and monitored as part of
the ERM process.
Portfolio Risk
To manage the impact of economic uncertainties, the
Manager monitors economic development as well as
any policies that have an impact on the daily operations
within the portfolio.
Financial Risk
The Manager monitors the financial market risk and
capital structure actively as prudent capital management
is the key for sustainable business. The Manager ensures
that there is diversity in terms of source of funds, a well-
staggered debt maturity profile, and a gearing ratio within
its target range, to mitigate any financial risk.
Operational Risk
Guidelines have been in place to ensure business
continuity. This includes the monitoring of incidents,
ensuring safety-related standards and procedures are set
in place, within the portfolio. To mitigate the risk of any
disasters, disaster recovery testing is conducted at least
once a year.
People Risk
People are the key to the business. Succession planning
has been put in place for key personnel and staff
remuneration is periodically reviewed to ensure it is
aligned to the market to retain and reward staff.
Performance and Reputation Risk
Annual total return, NAV and MER are monitored and
measured against peer benchmarks to ensure that the Trust
is performing better than or at least on par with the market.
In addition, regulatory requirements on base capital and
financial resources are being monitored to ensure that the
requirements are met on an ongoing basis.
In addition a Key Risks and Controls Matrix (“Risk Matrix”)
covering CIT’s and the Manager’s relevant material risks
by risk category (Commercial & Legal; Economical/
Financial; Operational; and Technology), the likelihood
of the risk occurring, the consequence should it occur
and the controls put in place to mitigate or manage
these risks are tabled and monitored at ARCC level on a
quarterly basis. Risks are analysed by combining estimates
of likelihood and consequences, adequacy of existing
controls/treatments or actions to determine whether
a level of risk is to be accepted, or requires specific
management responsibility or escalation to the ARCC.
Identified risks are reviewed bi-annually or whenever the
business environment changes substantially to ensure that
changes in circumstances have not altered risk priorities.
Identified controls/treatments or actions are reviewed
quarterly to ensure that changes in circumstances have
not affected their adequacy and effectiveness.
In addition to the Risk Matrix, reports on the internal
controls are also provided to the ARCC on a periodic basis
CAMBRIDGE INDUSTRIAL TRUST | A WINNING FORMULA
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