SAMPLE RISK PROFILE

STRATEGIC RISKS

1) Economic Risk. A slowdown in the economic growth in the Philippines could materially
and adversely affect the company’s business considering that the company’s business
and assets are mainly based in the Philippines.

2) Political and Social Risk. Political and/or social instabilitY could result to the delay or
obstruction of the company’s operations and significantly affect the company’s financial
position and reputation.

3) Legal/Regulatory Risk. Non-compliance with changing government laws, rules and

regulations exposes the company to potential liabilities, penalties, damaged reputation
and loss of income.

4) Reputation Risk. Damage to the company’s reputation exposes it to loss of customer,

profits and trust from its shareholders and stakeholders.

5) Competition Risk. Existing and new players in the market may hamper the company’s
growth in revenues.

6) Customer Wants Risk. Inability of the company to respond to the changing customer
requirements may result in opportunity costs

7) Technological Innovation Risk. Delayed adoption of new or modern technologies

significantly affects the company’s viability and ability to achieve or sustain competitive
advantage.
SAMPLE RISK PROFILE

OPERATIONAL RISKS

8) Land Acquisition Risk. Granting by the courts of just compensation to the landowners,
whose lands the company is acquiring for use in its projects, above the prevailing land
market value can significantly affect the company’s profitability.

9) Litigation Risk. Filing of injunction cases by land claimants, environmentalists, and other
groups against the company will disrupt, delay, impede or obstruct the company’s
operations and result to financial losses.

10) Outsourcing Risk. Third parties (e.g. traders, brokers, forwarders, etc.) that are not
performing in a manner consistent with the company’s requirements, strategies and
objectives may significantly affect the company’s operations, reputation and its way of
conducting business.

11) Right of Way (ROW) Risk. Difficulty in the negotiation and acquisition of lots affected by
company operations can result to delayed operations and subsequent loss of possible
revenues.

12) Employee/Third Party Fraud Risk. Fraudulent or misleading activities perpetrated by

employees, customers, suppliers, agents, contractors, brokers or third party
administrators against the company for personal gain (e.g.
misappropriation/misrepresentation of physical, financial or information assets) expose
the company to financial losses.

13) Illegal Acts Risk. Unlawful/dishonest acts committed by the company’s employees
expose the company to damaged reputation.

14) Unauthorized Use Risk. Unofficial use of the company’s physical (e.g. company vehicles),
financial or information assets (company logo, stationery, letterhead, etc.) by employees
or third parties exposes the company to unnecessary waste of resources and financial
losses.

15) Authority/Limit Risk. Failure to establish or enforce limits on personnel actions may
cause employees to commit unauthorized or unethical acts or to assume unauthorized
or unacceptable risks.

16) Performance Measure Risk. Non-existent, irrelevant or unreliable performance

measures that are inconsistent with established business strategies threaten the
employees’ ability to execute the company’s strategies.

17) Employee Performance Risk. Inability of employees to render satisfactory performance

can have significant impact on the efficiency of the company’s operations and on the
achievement of the company’s objectives and strategies.
SAMPLE RISK PROFILE

18) Communications Risk. Ineffective communication may result in messages and actions
that are inconsistent with the direction and/or authorized responsibilities and to longer
lead times for decision-making.

19) Organization Structure Risk. Management lacks the information needed to properly
assess the effectiveness of the organizational structure which threatens the company’s
capacity to effectively change or achieve its long-term strategies.

20) Knowledge Capital Risk. Lack of employee training programs results in slow competence
development and constrains employee growth.

21) Succession Risk. Weak succession plans to prepare personnel for higher responsibilities
can hamper the continuity of the company’s business operations and decision-making.

22) Union Risk. Labor disputes/manpower strikes threaten the company’s capacity to
effectively continue its operations.

23) Human Resources Risk. Loss of experienced, skilled and/or specially trained personnel in
the company’s core operations who cannot be readily replaced can significantly affect
the company’s ability to achieve its critical objectives.

24) Performance incentives: Unrealistic, misunderstood, subjective or non-actionable

performance measures may cause managers and employees to act in a manner
inconsistent with the organization's objectives, strategies and ethical standards, and with
prudent business practice.

25) Information Relevance Risk. Irrelevant information created or summarized by

employees adversely affects the implementation of more critical activities and results to
loss of valuable company time.

26) Information Access Risk. Failure to adequately restrict unofficial access to information
(data or programs) may result in unauthorized knowledge and use of confidential
information that may be detrimental to the company.

27) Information Integrity Risk. Unreliable information generated by the various application
systems and/or personnel adversely affects the effective decision-making of top
management.

28) Infrastructure Obsolescence Risk. Presence of outdated information technology

infrastructure (e.g. hardware, software, business and technical information systems,
corporate databases) can significantly affect the efficiency of the company’s operations
and competitive advantage.

29) Product Failure Risk. Inadvertent use of sub-standard products exposes the company to
costly repairs, product returns, inefficiencies and operational delays.
SAMPLE RISK PROFILE

30) Equipment Malfunction Risk. Breakdown of critical parts and/or equipment may lead to
equipment damage, business interruption, loss of revenues and loss of lives and
properties.

31) Equipment Obsolescence Risk. Presence of obsolete parts and equipment leads to
operational inefficiencies, higher overhead costs, unavailability of materials/supplies and
possible business interruption.

32) Project Implementation Risk. Unsuccessful and/or delayed business development

activities could result to cost overruns or the total or partial loss of the company’s
interest in the project under development, construction or expansion.

33) Insurance Risk. The company may not be able to obtain or maintain adequate insurance
which can significantly affect the company’s financial position in the event of a
catastrophic loss.

34) Management Fraud Risk. Intentional misstatement of financial statements or

misrepresentation of the company’s capabilities or intentions may adversely affect the
company’s reputation and the external shareholders’/stakeholders’ decisions in relation
to the company.

35) Investment Evaluation Risk. Lack of relevant and/or reliable information supporting
investment decisions and linking the risks undertaken to the capital at risk may result in
poor investment decisions.

36) Budget and Planning Risk. Non-existent, unrealistic, irrelevant or unreliable budget and
planning information may cause inappropriate financial conclusions and decisions and
significantly affects the implementation of critical activities.

37) Material Sourcing Risk. Difficulty in sourcing critical, highly technical and complex goods
and services can significantly affect the efficiency of the company’s operations and
implementation of critical activities.

38) Intellectual Property Rights Risk. The lack of any measures to adequately protect the
company from disclosure or misappropriation of its proprietary information could allow
others to gain access to valuable, proprietary information which could have a negative
effect on the company’s business.

39) Compliance Risk. Non-compliance with the regulators or customer requirements and/or
prescribed organizational policies and procedures may result in lower quality of product,
higher production costs, lost revenues, unnecessary delays, penalties, fines, etc.

40) Taxation Risk. High local taxes imposed on the company (e.g. real property tax)
significantly affect the company’s income and profitability.
SAMPLE RISK PROFILE

41) Channel Effectiveness Risk. Poorly performing or positioned distribution channels (i.e.
transmission or distribution lines) threaten the company’s capacity to effectively and
efficiently access current and potential customers and end users.

FINANCIAL RISKS

42) Price-Interest Rate Risk. Significant movements in interest rates expose the company to
higher borrowing costs and lower investment yields.

43) Financing Risk. Difficulty in sourcing needed funds can significantly affect the company’s
effective operations and the implementation of its revenue-generating projects.

44) Credit-Collateral Risk. Loss of value or inability to secure control of an asset provided to
the company as a security may significantly affect the company’s financial position.

45) Price-Commodity Risk. Significant fluctuations in the prices of critical commodities

exposes the company to higher overhead costs and lower profit.

46) Accounting information: Over-emphasis on financial accounting information to manage

the business may result in the manipulation of outcomes to achieve financial targets at
the expense of not meeting customer satisfaction, quality and efficiency objectives.

HAZARD RISKS

47) Environmental Exposure Risk. Activities that can have adverse effects to the
environment expose the company to compensation liabilities and penalties, damaged
reputation and may result in a cease and desist order.

48) Catastrophic Loss Risk. The occurrence of natural disasters/calamities can significantly
affect the company’s ability to sustain operations and provide essential product and
service.

49) Safety Risk. Lapses in maintaining and following a safe working environment for the
company’s personnel, contractors and clients exposes the company to potential civil
liabilities, loss of business reputation and other costs.

OTHERS
50) Pilferage Risk