Governance and Economic Dimension

• Central Pattana ensures effective risk governance by establishing a comprehensive risk policy, setting clear guidelines for risk appetite and implementing a robust risk management framework. The roles of risk management and internal control are distinct and operate autonomously. Central Pattana assigns the responsibility for overseeing and managing risk to the following committees and executive management.
• The Risk Policy Committee, chaired by an independent director and comprising the Board and CEO, is responsible for the following: being informed on matters that are within its scope of authority and responsibility and making recommendations on the risk policy, risk management structure and framework, and the key risks that the organization faces; reviewing and approving the organization's risk appetite and tolerance; monitoring and overseeing the establishment of performance metrics and targets, and key risk indicators; reviewing and assessing the effectiveness and efficiency of management’s enterprise risk responses; and periodically reporting risk management activities to the Board of Directors.
• At the management level, the Risk Management Committee, chaired by the CEO and comprising executive and non-executive directors, is responsible for the following: overseeing the implementation of risk policy and risk management guidelines; ensuring that all business units within the organization have identified, assessed, mitigated or managed, and reported the risks that have the potential to affect the achievement of the organization's objectives and integrated risk management into its business plan with periodic progress reporting; providing support and guidance on enterprise-wide risk management activities; and periodically presenting risk management reports to the Risk Policy Committee and the Board.
• In order to facilitate the Risk Management function, the Risk Management Department, acting as the Secretary of the Risk Management Committee, is responsible for tracking, analyzing and reporting risks to the Risk Management Committee and assisting risk owners in identifying key risks and collaborating with them to assess potential exposure and develop appropriate measures to address and manage the risks to acceptable levels. The Risk Management Department reports to the Chief Finance, Accounting and Risk Management Officer.
• The Risk Management Department is responsible for assisting Internal Control in verification of critical activities across the organization in consideration of the risk exposure and operations of each business unit; and utilizing the findings and insights from internal control reports to identify and analyze key risks affecting the organization. The Risk Management Department is also tasked with providing a risk management report to the Audit Committee at least twice a year.
• The diagram below outlines Central Pattana’s Risk Governance Structure.
  

• The following diagram summarizes Central Pattana’s risk management framework, which is in alignment with the COSO ERM 2017.
  
• Central Pattana conducts a thorough review of the organization's key risks and risk appetite on an annual basis and whenever there is a significant change that could potentially affect the organization's ability to compete effectively.
• To ensure alignment with the company's business direction and strategy, our risk identification process encompasses both internal and external factors. We assess potential opportunities and consider events that could impact the business, whether directly or indirectly. Following the identification of risks and opportunities, we employ a risk map to prioritize them based on their significance. This prioritization guides us in developing a risk management plan, enabling us to effectively monitor and manage the identified risks to levels deemed acceptable.
• To review the risk exposure on a quarterly basis, we use Key Risk Indicators (KRIs) to track and monitor key risks and assess the progress against the established risk management plan. The results of these assessments are compiled into reports that are presented to both the Risk Management Committee and the Risk Policy Committee.
• We regularly run sensitivity analyses and stress tests to analyze both financial and non-financial risks in which a range of scenarios such as rising wages, increasing electricity costs and regional droughts, is evaluated so that we can better understand the potential impacts and risks to our economic performance and business operations.
• The risk management process undergoes periodic audits and verifications (at least once in two years) by Internal Audit, which evaluate the effectiveness of the company's risk management practices and, where appropriate, make improvements and corrective actions.

• Central Pattana maintains a continuous monitoring and assessment process to evaluate the impact of any emerging risks that may arise. This ongoing monitoring allows us to update our risk responses in a timely manner, ensuring that they remain effective and aligned with the changing risk landscape. The emerging risks we identified are summarized in the table below.

  Topic	Category	Description	Impact	Mitigation action
  Climate change and Its impact on El Nino	Environmental	In early 2023, NOAA forecasted a transition from La Niña to a strong El Niño by mid-2023. This is expected to intensify the effects of climate change, causing more frequent and severe heat waves, storms, floods, and droughts, particularly across the Pacific Ocean. This is likely to exacerbate the impacts of climate change globally, resulting in more heat waves, storms, floods and droughts especially across the Pacific Ocean, where rising temperatures could exceed 2°C on the equator. As a result, Asia and Australia may face hotter conditions and more severe droughts. With this El Niño event expected to surpass the 2016 occurrence, which saw global temperatures reach record highs, Thailand is likely to experience more intense heat waves and prolonged periods of droughts, with 29 provinces particularly those in the northern and northeastern regions at risk of water shortages, along with worsening air quality and PM2.5 pollution.	Global Climate Effects: Increased global temperatures, especially on the equator, could exceed 2°C, affecting Asia and Australia with more severe droughts and heat waves. Water Scarcity: For businesses, particularly those with properties in high-risk areas, the potential for water scarcity could lead to significant financial losses and increased operational costs. Air Quality Issues: Higher concentrations of PM2.5 due to heat and drought could affect public health, increase regulatory costs, and necessitate additional property maintenance.	Water Efficiency Measures: Implementing water-efficient fixtures, optimizing wastewater treatment and recycling systems, and maintaining strong relationships with water suppliers to manage drought conditions. Air Quality Management: Installing air quality monitors and purifiers, suspending activities that generate dust, raising awareness to reduce pollution, and piloting new technologies to lower PM2.5 levels.
  Environmental Regulatory and Legislative Change	Environmental	The increasing unpredictability of climate change has prompted countries, including Thailand, to enhance their environmental regulations and legislative measures. Thailand aims to achieve carbon neutrality by 2050 and net zero emissions by 2065, driving the introduction of new environmental laws such as the Climate Change Act, Thailand Taxonomy, and IFRS.	Failure to comply with these new regulations can result in increased costs due to fines, potential reputational damage, and loss of stakeholder confidence. Non-compliance can also disrupt business operations and lead to financial and legal consequences.	Proactive steps have been taken, such as establishing the Climate Change and Environment Committee (CEC) under the Corporate Governance and Sustainable Development Committee. This committee monitors regulatory changes, conducts comprehensive studies, and implements necessary standards and improvements to ensure compliance with new laws and regulations. Under supervision of CEC, the Company had developed mitigation strategy for this risk which describes in 2024_Central Pattana_AR_56-1_One Report 2023.pdf page 154-.161. under "Climate adaption"

Central Pattana fosters a corporate risk culture through a range of methods, tools and channels including:

• Awareness Utilize various channels and formats to raise awareness about key risks by, for instance, distributing communication products via email and Workplace that provide information on cyber risks and the importance of data privacy and compliance with regulations like the Personal Data Protection Act (PDPA).
• Training Provide online training courses to all employees on topics including risk management and crisis management and organize workshops specifically tailored for key functions such as general managers.
• Drills and Tests Conduct periodic crisis management drills to simulate different scenarios such as fires, sabotage incidents and falls from height and carry out regular business continuity plan testing for instance information security at least once a year.
• Establish ‘risk’ as one of the metrics for measuring employee performance. For example, in the case of Loss Prevention staff, their performance evaluation also includes specific criteria related to incident and crisis management.
• Communicate with stakeholders regarding key risks and their impacts, risk management measures and controls in place, and emerging risks through One Report to ensure they have a thorough understanding of the organization’s risk landscape.