Annual Report 2021

066 Corporate Governance Report Annual Report 2021 Miramar Hotel and Investment Company, Limited External Auditors The external auditors further supplement the 3rd Line of Defence process by obtaining an understanding of internal controls in the course of their audit work. The external auditors would independently communicate with the Audit Committee on any significant deficiencies in internal controls.  Mitigation Measures and Evaluation Findings During the year, the risk management process assessed 11 different categories of risk in respect of their occurrence likelihood and impact on our financial performance, reputation, health and safety, legal and rules compliance, staffing and environmental effects. They are summarized as follows: Risk Categories Key Risks Key Measures in Risk Mitigations Risk Level (Risk Velocity) Risk Momentum Investment Strategy Return on acquisitions/ investments/business developments could turn out to fall short of expectations due to uncontrollable external factors and may result in financial loss – Investment decisions are supported by detailed integration plan and business strategies with management approval – Potential projects/ investments are subject to extensive due diligence review by in-house specialists and external advisors – Continuing monitoring and review of all aspects of development, planning and progress by experienced managers – Controls over projects/ investments are independently reviewed by Internal Audit Medium (Slow)  Under the current investment plan and control procedures, the risk is well under control Economic and Political Outlook A significant portion of the Group’s businesses and operations are in Hong Kong; adverse changes in economic and political environments could have a direct or indirect impact on the Group’s earnings – Establishment of risk indicators to constantly evaluate the economic environment it operates in and enable prompt response to any changes – Continuing monitoring of changes in the political agenda in Hong Kong and mainland China – Periodical review of marketing strategies to steer to changes in the economic and political outlook – Closely monitoring of business performance with a view to optimizing business strategies Medium to High (Slow)  Hong Kong’s economy is affected by the epidemic situation, which is still full of uncertainties due to the COVID-19 variants. The risk level maintains to increase