IHH Annual Report 2018

Strategic Geopolitical The Group is subject to political, economic and social developments, conditions and changes in the countries that we operate, which include our home markets of Malaysia, Singapore, Turkey, India and key growth markets of China and Hong Kong. Our key mitigating strategy includes the diversification of businesses and geographies in the Group. The Group’s presence in various countries helps to mitigate the impact of political instability and market volatility in each specific country. For countries facing political uncertainties, we continue to actively monitor the situation to ensure the potential adverse impacts are understood and where possible, mitigated. • Compliance and regulatory risks ​ Operational Talent & Workforce Management The Group’s ability to meet our strategic objectives in delivering comprehensive innovative healthcare solutions is highly dependent on a diverse set of expertise, skill-sets and experience offered by our healthcare professionals from various countries. Inability or failure to recruit and retain key staff could affect the Group’s operations. Talent management and retention strategies are constantly reviewed in accordance with the Group’s agile approach in retaining our workforce and attracting new talent to our team. Our learning and development programmes are in place to ensure our employees continuously strive to achieve their full potential. • Employee welfare • Employee health and safety • Talent retention • Availability of skilled manpower • Training and development ​ ​ Cybersecurity The Group employs information technology (IT) systems to support its business, including the provision of healthcare and telemedicine services. Security breaches and other IT disruptions could interfere with the Group’s operations and compromise information belonging to the Group and its patients, employees and partners, exposing the Group to liability which could adversely impact our business and reputation. Cybersecurity measures are continuously reviewed and upgraded, including monitoring of networks and systems, vulnerability assessments and penetration testing and employee training. Although the Group maintains insurance coverage to mitigate against the various cybersecurity risks where feasible, there can be no guarantee that all costs or losses incurred will be fully insured. • Security and asset protection ​ Financial Foreign Exchange Exchange rate instability could adversely affect our business, financial condition, results of operations and prospects. The Group is exposed to foreign exchange risk on sales, purchases, cash and cash equivalents, receivables and payables, and loans and borrowings that are denominated in a currency other than the respective functional currencies of Group entities. The Group actively monitors its foreign currency risk and minimises such risk by borrowing in the functional currency as its foreign investments. It also enters into foreign exchange forward contracts and cross currency interest rate swaps to manage its exposure. • Sustainable international healthcare services • High maintenance cost ​ Trend indicates change in pre-mitigation risk level over the year: The Group has established an effective and structured risk management system that helps to identify, track and mitigate principal risks associated with our operations. This system enhances the Group’s decision-making capabilities to ensure that all risks are managed in line with returns and expectations. Pre-mitigation risk increased Pre-mitigation risk remained unchanged Pre-mitigation risk decreased Key Area Principal Risk Factor Description Mitigation Measures Material Matters Trend 41 Strategic Report PRINCIPAL RISK