C A M B R I D G E I N D U S T R I A L T R U S T
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RISK MANAGEMENT
Portfolio Risk
The key objectives of CITM are to deliver secure and stable
distributions to Unitholders and to achieve long-term
growth in NAV per unit in order to provide Unitholders with
a competitive rate of return for their investment. To achieve
these objectives, the Manager uses the following strategies:
• Pro-actively managing CIT’s property portfolio to
maximise returns;
• Selectively acquiring properties that meet our
investment criteria and enhance Unitholders’ value;
• Divesting of non-core properties; and
• Adopting prudent capital and risk management
strategies
The investment portfolio will primarily comprise real estate
used mainly for industrial purposes (including investments
in real estate related assets and/or other related value
enhancing assets or instruments). The investments will be
made in Singapore and Asian markets, with the current
focus on Australia, Japan and Malaysia, depending on
investment opportunities and market conditions and will
generally be for the long-term. To manage the impact
of economic uncertainties, CITM monitors economic
development as well as any policies that have an impact on
the daily operations within the portfolio.
Financial Risk
CITMmonitors the financial market risk and capital structure
actively as prudent capital management is the key for a
sustainable business. CITM needs to ensure 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 and liquidity risk.
Credit Risk
Credit risk is the potential financial loss resulting from the
failure of a customer or a counterparty to settle its financial
and contractual obligations toCIT, as andwhen they fall due.
CITM has established credit limits for tenants and monitors
their balances on an on-going basis. Credit evaluations are
performed by CITM before lease agreements are entered
into with the lessees. In addition, CIT requires the lessees to
provide tenancy security deposits or corporate guarantees,
or to assign rental proceeds from sub-lessees to CIT.
(3) Risk Monitoring
To ensure that risks are effectively managed and
controlled, the following are some of the methods of
risk monitoring adopted by CITM. The monitoring
results are reported to ARCC and noted by the Board
through ARCC updates.
• Quarterly monitoring of ERM Risk Appetite
Statement
• Quarterly review of the Risk Matrix
• Quarterly monitoring of outstanding internal/
external audit recommendations
• Quarterly attestations from employees, appointed
representatives, Heads of Departments and
Directors in terms of compliance with relevant
regulatory requirements
• Quarterly reporting of breaches, potential breach
and loss events
In addition to the above risk monitoring methods, CITM
has formulated a Compliance Monitoring Framework
using the Compliance Matrix as a base document.
A risk assessment of all regulatory requirements
impacting both CIT and CITM will be performed on an
annual basis which will guide the approach taken for
Compliance’s oversight function. The risk assessment
exercise consists of both inherent risk and residual risk
assessment with a rating scale of low, medium and
high. With the results generated, Compliance conducts
oversight through a combination of routine monitoring
and risk-based monitoring programmes (otherwise
known as the Compliance Monitoring Programme).
(4) Reporting
Reports are provided to ARCC/Board/Regulators on
a regular basis to provide updates on CITM’s risk and
compliance management activities.
Risks Tracked
CITM undertakes an iterative and comprehensive approach
in identifying, managing, monitoring and reporting of
material risks. Such material risks include:
