Risk Management

SHR has established a systematic Enterprise Risk management Policy and Plan to prevent and mitigate the impact of various risks. These include natural disasters such as floods, storms, wildfires, tsunamis, earthquakes, and landslides, as well as safety risks for guests and employees. Regular inspections of electrical systems, plumbing, buildings, and the surrounding environment are conducted. Emergency response plans are in place, including evacuation drills, communication with local authorities, and regular staff training.

In addition, the Company places great importance on assessing financial risks, reputational risks, and climate-related risks such as droughts, in order to maintain high service standards and build ongoing customer trust.

Risk Management Plan

SHR implements a comprehensive risk management plan based on four key steps:

1. Risk Assessment – Analyze specific risk issues to identify new threats that may impact business operations.
2. Risk Mitigation – Implement preventive measures such as installing early warning systems, improving building structures, and securing important documents in safe areas.
3. Preparedness – Conduct emergency response drills and establish dedicated response teams.
4. Post-Incident Recovery – Restore hotel operations to normal as quickly as possible through collaboration with insurance companies and local communities.

Each step is reviewed and updated at least once a year to ensure alignment with evolving conditions and risks.

Business Continuity Management

The Company has established an Enterprise Risk Management policy and process to identify potential events that may impact business operations and to ensure risks are managed within acceptable levels. A dedicated risk management team regularly inspects hotel properties and assesses both physical risks and transitional risks.

To promote a strong risk management culture, the Company encourages all employees to report any risks that may cause damage to the organization.

To ensure uninterrupted hotel operations during emergencies, the Business Continuity Plan (BCP) includes regular staff training for various scenarios such as floods, fires, tsunamis, earthquakes, and severe storms. The Company has also established essential backup systems, including emergency power supplies and communication networks. Additionally, hotels continuously assess risks and update the plan to ensure fast recovery and maintain customer confidence, even in times of crisis.

Fostering a Risk Management Culture

SHR places strong emphasis on embedding a risk management culture at all levels of the organization. The Company integrates risk management principles into its business strategy and corporate values (D-Dynamic), while providing both e-Learning and in-person workshops to employees across all levels. This supports active participation in ongoing risk assessment and mitigation.

The Company has appointed Risk Coordinators and holds quarterly executive meetings to evaluate key risks. Key Performance Indicators (KPIs) are also set to drive tangible progress in risk management.

Climate Change Risk Management

SHR incorporates climate-related risk considerations into the planning and development of new projects. A reserve fund has been established for self-managed hotels to cover potential damage caused by natural disasters, such as coastal erosion. The Corporate Governance and Sustainability Committee is responsible for overseeing, reviewing, and monitoring climate risk management strategies. The committee convenes at least four times per year.

Key Risk Factors Affecting the Company's Business Operations

SHR recognizes both strategic and operational risks that may impact business continuity and performance. The Company conducts regular risk assessments and monitoring to ensure effective risk response. Key risk factors include:

1. Risk from Tourism Industry Volatility
   The hotel industry is closely linked to global economic conditions, geopolitical events, natural disasters, and pandemics such as COVID-19. These factors influence traveler confidence and behavior.
2. Risk from Overseas Operations
   The Company operates in multiple countries, including the Maldives, Fiji, and European nations, each with distinct legal systems, cultures, and economic conditions, which may affect management and operating costs.
3. Foreign Exchange Risk
   A significant portion of the Company’s revenue is in foreign currencies, while some costs are in Thai Baht. This creates exposure to exchange rate fluctuations.
4. Risk from Dependence on Strategic Partners
   SHR collaborates with global hotel brands such as Hilton, Outrigger, and Hard Rock. Any changes in these partnerships or their terms may impact brand image and business performance.
5. Financial and Debt-Related Risks
   Business expansion and hotel renovations require substantial investment. The Company emphasizes liquidity management, debt servicing, and prudent financial planning.
6. Environmental and Climate Change Risks
   Hotel operations in coastal or island areas are vulnerable to rising sea levels, storms, and other climate-related events. Additionally, investor and customer expectations regarding ESG performance are increasing.
7. Human Capital and Service Labor Risks
   The hospitality industry relies heavily on skilled labor. Shortages, high turnover, or inadequate training may compromise service quality.
8. IT System and Cybersecurity Risks
   Modern hotel operations depend on information technology systems, including booking engines, customer data management, and backend systems. System failures or cyberattacks may disrupt operations and erode customer trust.

SHR is committed to a comprehensive approach to risk management, adhering to the COSO ERM Framework. The Company continuously monitors, reviews, and updates risk mitigation plans to strengthen business resilience and long-term sustainability.