RISK GOVERNANCE The ERM Framework operates within a risk governance structure based on three lines of defence to ensure the overall ERM process and system of internal controls remain adequate and effective. First Line of Defence Business units are responsible for identifying risks arising from their business activities and implementing effective controls to manage the identified risks. Appropriate policies and procedures are in place to guide the business units’ operations within the approved risk appetite. Second Line of Defence The Compliance and Risk Management team oversees the design, implementation and enhancement of the ERM Framework. It also provides independent monitoring and review of risk management processes and reports material risk issues to the Management and the ARCC. Third Line of Defence Internal Audit reviews the adequacy and effectiveness of the internal control and risk management systems while External Audit focuses on the review of financial reporting processes and provides independent assurance to the Management and the ARCC. The Board of Directors of the Manager (the “Board”) is responsible for overseeing the ERM Framework and ensuring the establishment of the overall risk strategy, risk governance and internal controls across ESR-REIT, the Manager and ESR-REIT Property Services Pte. Ltd. (“EPS”) (collectively, the “Managers”) to safeguard Unitholders’ interests and ESRREIT’s assets. The Audit, Risk Management and Compliance Committee (the “ARCC”) supports the Board by providing dedicated oversight of risk management at the Board level, including the setting up of a robust internal control system, and the establishment of enterprise-wide risk management policies and processes to ensure proactive management of key risks and accountability within ESR-REIT and the Managers. The management team of the Manager (the “Management”) is responsible for the development, implementation and monitoring of the risk management practices across operations. First Line of Defence Second Line of Defence Third Line of Defence BOARD OF DIRECTORS AUDIT, RISK MANAGEMENT AND COMPLIANCE COMMITTEE MANAGEMENT Business Units Compliance & Risk Management Internal Audit External Audit 87 ESR-REIT ANNUAL REPORT 2025
RkJQdWJsaXNoZXIy NTM2MDQ5