Sustainability Report

Connectivity Between Principal Risks

Managing the principal risks for Royal Selangor

A trend matrix illustrates the connectivity between principal risks, as shown in Table 10.4.4. It highlights how one risk can influence others, showing the interdependencies among various principal risks. Growth emerges as the most interconnected, impacting multiple other risks.

Principal risk

Impact on strategy

Managing the risks

Effective feedback

Risk owner

Growth Ability to achieve growth

Growth is needed to increase shareholder value. Insufficient growth could impact talent retention

A clear strategy for growth. Reviews on markets with growth potential Investment in new technology

Monthly operating review Board KPI review

MD

Stable trend

Connectivity between the principal risks

Climate change business disruption & loss

Failure to respond to climate change may impact our markets & operations

GHG reduction & energy efficiency targets

Set reduction in Scope 1 & 2 GHG emissions Monthly review with net zero emission committee

Operating risk committee New trend

Connectivity between Principal Risks

Growth

Climate change

Technology

People

Business continuity

Economy & geopolitics

Commercial

Product quality

Cyber security

Legal & compliance

Growth

Climate change

Technology Disruption due to competitor

Technology erosion could impact market share

Nurture culture of innovation Investment in product development

Review of new products progress

R&D head

Stable trend

Technology

People

People Ability to retain people

Failure to develop & retain right people causes business to suffer

Fair & competitive pay Investment in career development

Regular employee engagement survey

HR Head

Business continuity

Stable trend

Economy & geopolitics

Commercial

Business Continuity Disruption due to supply chain

Disruption to supply chain could impact financial performance

Business continuity & disaster recovery plan for critical materials. Alternative source for sole supplier

Test business continuity plan

Procurement head

Product quality

Stable trend

Cyber security

Economy & geopolitics Impact of economy & geopolitical environment

External adverse events could disrupt our business

Larger geographic footprint & diversified portfolio

Monthly order trend

Finance head

Legal & compliance

Stable trend

Commercial Loss of focus on customers & market

Failure to act & adapt market strategy to the changes in commercial environment

New products feedback through market research

Frequent customer input

Marketing head

Stable trend

Impact on Strategy and Managing the Risks

Product quality Failure of product causes harm to brand

Product quality issue may cause material harm to customers

Risk assessments and quality assurance to address product performance.

Regular quality reporting

QA head

The data on the connectivity between principal risks informs the Viability Statement assessment in Table below for future scenario planning and risk mitigation efforts. The table provides a summary of the risks with the greatest potential impact on the company, along with strategies for managing these risks, establishing effective feedback channels, and identifying key persons in charge (PICs) responsible for risk management.

Stable trend

Cyber security Impact on company

Cyber attacks could compromise integrity of IT system

Proactive focus and risk analysis on cybersecurity

Compliance with recognised standards.

BID head

Up trend

Legal & Compliance Ethical breach or failure to meet contractual obligations

An ethics or compliance breach could harm our reputation

Proactive approach by ethics and compliance

Internal audit findings, exit interview and

Legal Head

team encouraging reporting of ethics violations.

Stable trend

ethics question on performance review

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