Enterprise Risk Management
In line with PLC’s core value of responsible leadership, the Company aims to protect its long-term growth through the identification, management, and monitoring of potential risks.
The Board of Directors has assigned the supervision of PLC’s risk management system to the Risk Oversight Committee.
Enterprise Risk Management Committee
The Company has an Enterprise Risk Management Committee (ERMC) which is an oversight committee created to act as the monitoring body for the individual risk management activities of the Corporation. The ERMC has the responsibility of developing a formal framework to assist the Company in managing its risks and is mandated to report regularly to the Board Risk Oversight Committee on any risk concerns.
Economic and Political Conditions
The Company's business is mainly the acquisition of investments in gaming, which are generally influenced by Philippine political and economic conditions. Events and conditions that may have a negative impact on the Philippine economy as a whole may also adversely affect the Company’s ability to acquire various investments.
In order to mitigate the risk above, management keeps abreast of any potential condition that may adversely affect its operations, and, with the leadership of the Company’s board of directors, considers available options and applicable steps to take to minimize risks.
Changes to the Philippine Laws and Regulations
Although laws and regulations are enacted for the common benefit, changes to these laws and regulations may create negative effects to the operating and financial condition of PLC, including its subsidiaries and affiliates.
In order to mitigate the risks mentioned above, the Company continues to exercise fiscal prudence and adopts what it considers conservative financial and operational controls.
As the Entertainment City grows and accommodates more players, the increase in competition also poses a risk to the Company as operations may be affected by the increase of players in the market. Aside from the Entertainment City, new developments are also expected in other parts of Metro Manila and other cities like Cebu.
In spite of the increase in competition, the increase in number of players in the gaming industry is expected to improve the Philippines’ ability to attract more foreign players to the Entertainment City, making the gaming industry in the country more robust. The Company monitors the Company’s performance and the performance of its competitors. The Company also endeavors to always be up-to-date on market trends.
Risk relating to the Company and its subsidiaries
- Dependence on Suppliers
POSC’s lottery operations is anchored on a two-system network. The Company has existing contracts with two global leaders in the lottery industry for the supply of computer supported lottery gaming systems. In the event that the contracts are terminated or suspended, operations and business of the Company may be impaired.
- Business Interruption Risk
The operations of POSC and its subsidiaries are dependent on the reliability of its central computer system and the communications infrastructure needed to run it. Any breakdown or failure in the system provided by its suppliers, or failure in the communication infrastructure may negatively affect the Company’s financial performance. However, this risk of business interruption is unlikely to happen due to the redundancy offered by the two suppliers. The communications infrastructure is being provided mainly by the two biggest telco providers in the country and where needed, satellite connectivity.
PLC may be at risk for breach of data privacy as detailed information is gathered from customers and prospective buyers, suppliers, contractors and other business partners. This risk is mitigated through company-wide orientation on the Data Privacy Act, the topics of which include legal bases and implementing rules and regulations, rights of the individuals owning the information, exercising breach reporting procedures and other advisories.
With the current business environment, Information Technology risks are ever increasing. These cover unauthorized access to confidential data, loss or release of critical information, corruption of data, regulatory violations, and possible increase in costs and inefficiencies.
In order to address these risks, PLC has a co-location arrangement with redundant capability and automatic fail-over set-up for disaster recovery. It also continues to implement enterprise security solutions to manage external and internal threats. Annual review of technology roadmap to ensure the alignment between the business and information technology is performed.