Annual Report 2019

071 Miramar Hotel and Investment Company, Limited Annual Report 2019 Principal Risks Principal Risks Miramar Group’s core businesses span hotels & serviced apartments, food & beverage, property leasing and travel agency. There are several principal risks and uncertainties which may directly or indirectly affect the Group’s business operations, financial conditions, and future prospects. The magnitude of impact arising from these risks on the Group depends on severity, duration and locality of the event should it occurs. Risk is a function of many dynamic forces and factors at play in the environment the Group operates. As such, there are risks that are not significant now but can turn significant, risk we are not aware of, and/or new risk emerging in the future. A comprehensive risk management system is established to continually monitor, review, evaluate, update and mitigate these risks. Outlined here are the principal risks that may affect the Group’s businesses, and it is not intended to be exhaustive or comprehensive. 1. Economic Downturn, Social Instability and Investment Uncertainty The Group’s core businesses and investments are mainly in Hong Kong and susceptible to, amongst others, elements that impact consumer and investor confidence, retail spending, property prices, interest rates and visitor arrivals. With the continuous trade tensions between the US and China, the slowdown of China’s economic growth and the uncertainty associated with Brexit, the global economy is expected to grow at a conservative pace. Hong Kong being an international financial centre is expected to be affected to some extent. Coupled with the social unrest in the latter part of the year, the Hong Kong economy recorded its first annual contraction in 2019. As those negative factors still linger around, the Group businesses are expected to face severe challenges in the coming year. The Group would closely monitor the economic environment it operates in, and constantly evaluate and take appropriate actions to mitigate these risks and adjust our strategies and operations where appropriate. 2. Disaster Event Emerging infectious disease, together with Hong Kong being an international city, increases the risk of epidemic outbreaks in the community. Global warming and climate change increase the frequency of natural disaster events, such as super typhoon, earthquake or flooding. Depending on the severity, duration and locality, they could severely disrupt the Group’s business operations and cause damages to our properties. The Group has established a Crisis Management Team and devised comprehensive Business Continuity Management blueprints in an effort to minimize disruption to business operations, damage to assets and harm to personnel, on top of taking every preventive measures within our scope. Crisis management procedures have been regularly reviewed and annual drills on Business Continuity Plan are conducted to identify areas for improvement. The Group regularly conducts risk assessment, and has taken out comprehensive insurance, covering its properties, business operations and third-party liabilities.