SEO Version
65
Annual Report 2013
to recover higher costs of shortfalls in availability
could materially and adversely affect the Group’s
performance.
The Group manages this risk through constant
monitoring of the markets in which it operates and
continuous reviewof capital expenditure programs to
ensure they reflect market conditions. A continuous
focus on operating expenditure is also an important
method of mitigating this risk.
The Group has developed uniform processes and
procedures with applications such as SAP to manage
procurement of raw materials. The Group also has
developed strategic alliances with certain selected
major steel mills and other leading companies on
the purchase of steel supply, bunker, marine valves,
boilers, engines and other related equipment to
mitigate risks in such supplies.
2. INTERNAL RISKS
Internal risks are those arising from factors primarily
within the Group’s control, including from the Group
structure and processes.
INFORMATION TECHNOLOGY INFRASTRUCTURE
The Group depends on accurate, timely information
and numerical data from key software application
to aid day-to-day business and decision making.
Any disruption caused by failings in these systems,
of underlying equipment or of communication
networks could delay or otherwise impact the Group’s
day- to-day business and decision making and have
materially effects on the Group’s performance.
OPERATIONAL PERFORMANCE AND PROJECT DELIVERY
Failure to meet production targets can result in
increased unit costs, which are pronounced at
operations with higher levels of fixed costs. Unit
costs may exceed forecasts, adversely affecting
performance and the results of operations.
Failure tomeet project delivery times and costs could
have a negative effect on operational performance
and lead to increased costs or reductions in revenue
and profitability.
A number of strategies have been implemented
to mitigate these risks including management
oversight of operating performance and project
delivery through regular executive management
briefings, increased effectiveness of procurement
initiatives to reduce unit costs and improve delivery
of projects.
The Group has also established an enterprise
technology standards system under the guidance of
Singaporean and South Korean experts to enhance
the basic design and detailed design of ships and
marine engineering products.
EMPLOYEES
The Group depends on the continued contributions
of its executive officers and employees, both
individually and as a group.While the Group reviews
its people policies on a regular basis and invests
significant resources in training and development
and recognising individuals with high potential,
there can be no guarantee that it will be able to
attract, develop and retain these individuals at an
appropriate cost and ensure that the capabilities of
the Group’s employees meets its business needs. Any
failure to do so may affect the Group’s performance.
The ability to recruit, develop and retain appropriate
skills for the Group is made difficult by competition
for skilled labor.The failure to retain skilledemployees
or to recruit new staff may lead to increased costs,
interruptions to existing operations and delay in
new projects.
A number of strategies are implemented to mitigate
this risk including attention to an appropriate suite
of reward and benefit structures and ongoing
refinement of the Group as an attractive employee
proposition.
Corporate Gover nance and Transparency
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