Annual Report 2020

075 Principal Risks Miramar Hotel and Investment Company, Limited Annual Report 2020 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 they occur. Risk is a function of the interplay of many dynamic forces and factors in the environment in which the Group operates. As such, there are risks that are not significant now but can turn significant, risks we are not aware of, and/or new risks 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 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. In the past years, Hong Kong has been hit hard by consecutive crises, from the tensions between US and China, to the year-long social unrest and now the coronavirus pandemic. The Hong Kong economy has suffered a severe downturn and the Group’s businesses have been affected significantly as well. Although the majority of forecasts point to a rebound in the global economy in 2021 due to the rollout of vaccines, a high degree of uncertainty still lingers. Therefore, the Group’s businesses are expected to face a challenging year ahead. We 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 Emergent infectious diseases, together with Hong Kong being an international city, increase the risk of epidemic outbreaks in the community, like COVID-19 during the year. 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.