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Annual Report 2013
Once risk mitigation plans are agreed, each operating
subsidiary is asked to carry out a self-assessment
exercise which requires all operating units to confirm
compliance with the Group’s policies and also to
confirm that key operational controls are in place
and working effectively. The results of this exercise,
together with a review of specific plans for strategic
risks, enable the Board to confirm that the business
has a sound risk-based framework of internal controls.
The Group Auditors, internal and external, provide
independent reassurance that the standard of risk
management, compliance and control meet the
needs of the business. Group Audit status reports
are discussed with ERMC, Audit Committee and
Board on a regular basis. The Board also recognises
that the risks facing the business may sometimes
change over short time periods. Every quarter, each
operating subsidiary provides an update on new and
emerging risks and reports to update the Group’s
risks are provided to the ERMC, Audit Committee and
the Board.
The Board concurred with the opinions of its sub-
committees, i.e. Audit Committee and ERMC, of the
adequacy of the internal controls system (of which
risk management is one of its crucial segments) to
addressing its financial, operational, compliance and
information technology risks in meeting the current
scope of the Group’s business operations.
It is not possible and practical to identify and
anticipate every risk that may impact the Group.
While the Group’s risk management process attempts
to identify and manage (where possible) the key risks
it faces, no such process can totally eliminate risks
or guarantee that every risk is identified, or, that it is
possible, economically viable, or prudent to manage
such risks.
Consequently, there can never be an absolute
assurance against the Group failing to achieve its
objectives or a material loss arising. Some material
risks may not be known,others, even though currently
deemed as immaterial, could become material and
new risks may also emerge.
The Board affirms its overall responsibility on risk
management and to review the adequacy and
integrity of the control system on an annual basis.
1. EXTERNAL RISKS
The Group is subject to a number of external risks.The
Group defines external risks as those that stem from
factors which are mainly outside of its control. These
risks will often arise from the nature of the Group and
the industry in which it operates.
GLOBALECONOMICDOWNTURNANDUNCERTAINTIES
The global capital and credit markets have been
experiencing periods of extreme volatility and
disruption. The global economic uncertainties,
concerns over recession, inflation or deflation, energy
costs, geopolitical issues, commodity prices and
the availability and cost of credit, have contributed
to unprecedented levels of market volatility and
diminished expectations for the global economy
and the capital and consumer markets. These factors,
combined with others, precipitated a severe global
economic downturn, the full extent of which remains
to be seen.
The Group is susceptible to the cyclical world-wide
demand and pricing in its industries,which are highly
dependent upon global economic condition. The
uncertainties are likely to result in a decrease in the
overall demand for vessels and risks of default by the
ship-owners in taking delivery of the vessels upon
completion.
LEGAL, REGULATORY, POLITICAL AND SOCIETAL RISKS
The Group is at risk from significant and rapid change
in the legal systems, regulatory controls, custom and
practices in the regions in which it operates.
Political uncertainties, regime change and change
in society, including increased scrutiny of the
Group, its businesses or its industry, for example by
governmental and non-governmental organisations
or the media may result in, or increase the rate of,
material legal and regulatory change, and changes
to custom and practices. These affect a wide range of
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