Risk Management

Risk management forms an integral part of Sunlight REIT’s operating processes and is fundamental to the achievement of its vision, mission, and core values.

Governance Structure
The risk governance structure is depicted through a Three Lines of Defence model illustrating Sunlight REIT’s risk management accountability and responsibility.

Roles and Responsibilities of the Board and Management

The ultimate responsibility for the management of risks is assumed by the Board, which shall ensure that appropriate and rigorous systems to manage and mitigate risks are in place, and shall hold senior management responsible for the implementation of risk management activities. The Audit Committee, the Investment Committee and the Disclosures Committee are designated to assist the Board in risk governance by monitoring the risk assessment process and timely communicating to the Board on key risks where necessary, while the internal audit function is tasked with the responsibility of independently appraising Sunlight REIT’s risk management framework and reporting the results annually to the Audit Committee. The Board has also established a Risk Taskforce to monitor and assess the risk environment (and the top risks) of Sunlight REIT on a regular basis. Core members of the Risk Taskforce include the Chief Executive Officer, the Chief Financial Officer, the Assistant General Manager – Human Resources and Operations and the Compliance Manager (who also serves the role of Risk Manager).

Monitoring and Reporting of Risks

Bottom-up Approach

The top 5 risks (including any environmental, social and governance risks (ESG risks) and fraud risks) identified for each department will be escalated to the Risk Manager quarterly. The Risk Manager is responsible for aggregating the risk factors submitted by each department and preparing the risk register.

The ESG Committee (which comprises of the Chief Executive Officer, the General Manager – Investment and Investor Relations and a senior representative from the Property Manager as core members), on the other hand, reviews and monitors ESG risks (including climate-related risks) and makes recommendations to the Risk Taskforce which will review the risk register and give direction for action where necessary.

Top-down Approach

At the Risk Taskforce level, in order to have a comprehensive discussion of strategic risks, fraud risks and ESG risks (including climate-related risks), all department heads and responsible officers will be invited to an annual Risk Taskforce meeting to discuss on these identified risks together with the top risks identified in the previous risk assessment exercise to evaluate risks from a top-down approach.


The Risk Taskforce evaluates and prioritises the risks identified from both the bottom-up and top-down approach and determines the latest top risks of the organisation from Sunlight REIT’s perspective. A 5-by-5 risk matrix is used to assess risks of Sunlight REIT by risk ratings. The risk rating is scored in terms of the consequence and likelihood of occurrence. Risks are rated according to their residual and target risk levels.

The top risks are then presented to the Audit Committee and the Investment Committee as appropriate for review and evaluation on a quarterly basis, and may further be escalated to the Board if necessary.

The ESG Committee will report to the Disclosures Committee about ESG-related issues and risks (including climate-related issues and risks), if any, on a semi-annual basis. Material ESG-related issues and risks (if any) will be reported by the Disclosures Committee to the Board.

Investment Management

All acquisition and disposal transactions, as well as other key business transactions, of Sunlight REIT will undergo screening and due diligence procedures. For major decisions or other key business transactions above specified thresholds, risk assessment (covering ESG and climate-related risks) will be conducted during the decision-making process.

An acquisition checklist and a disposal checklist are in place to ensure that all transactions will undergo proper due diligence and approval procedures.

For more information on the risk management framework of Sunlight REIT, please refer to the section on Risk Management on pages 86-90 of the 2021/22 annual report of Sunlight REIT.