Melco Resorts & Entertainment Philippines
Corporate Governance
Enterprise Risk Management

Risk Management System

Melco Resorts and Entertainment (Philippines) Corporation (“Company”) is fully committed to maintaining an efficient and effective Risk Management System (“RMS”). Our RMS is embedded within our Company policies and procedures effected by our board of directors and management, applied in the Company’s strategic planning, designed to identify potential risks that may affect the Company, and manage risks to an acceptable level through an effective internal control system which provides reasonable assurance regarding the achievement of Company’s objectives.

Management has developed and presented to our Audit Committee a risk analysis and mitigation plan and regularly provides updates regarding significant changes to this plan. This plan addresses external and internal strategic risks, operational risks associated with processes, compliance and people, financial risks and information risks. The Board and the Company’s Supervisory Committee will review management presentations on risks assessed and risk mitigation strategies and actions.

Key components of the Company’s review of the effectiveness of its RMS include reviewing the application of the: (1) Melco Resorts & Entertainment Sarbanes-Oxley (SOX) Compliance Program; (2) internal audit function (3) management self-assessment/representations on significant risk exposures and mitigations; and (4) the Audit Committee review of the process to develop the risk analysis and mitigation plan and Management’s actions associated with significant risk exposures.

We will continue to review ways to further enhance the Company’s RMS including whether to establish a separate risk management department and formalize an overall enterprise risk management policy document.

Functions and Responsibilities

Board of Directors

Pursuant to the Company’s Amended Corporate Governance Manual, its Board of Directors shall formulate the Corporation’s vision, mission, strategic objectiveness policies and procedures that will guide the Company’s activities, including the means to effectively monitor management’s performance.

Particularly, the Board identifies key risk areas and performance indicators and monitor these factors, with due diligence, to enable the Company to anticipate and prepare for possible threats to its operational and financial viability.

The Company has also established committees, which perform the following functions relevant to the management of risk:

Audit Committee

  • Risk Management Mechanism

    Oversees and monitors the integrity and effectiveness of the Company’s internal audit function and risk management policies, procedures and practices.

    Oversees the credit management, market, liquidity, operational, legal and other risks of the Company, including the regular receipt from management of information on risk exposures and risk management activities.

  • Risk Management Functions

    Assesses, together with Internal Audit and senior management, and approves, policies and procedures to identify, accept, mitigate, allocate or otherwise manage various types of risks presented from time to time by management;

    Periodically evaluates such policies and procedures in light of developments in the Company’s business; and,

    Makes recommendations to the Board of Directors with respect to the risk management process.

Nominating and Corporate Governance Committee

  • Risk Management Mechanism

    Asists the Board of Directors in overseeing the Company’s compliance with legal and regulatory requirements, in particular the legal and regulatory requirements of the Philippines and the listing rules of the Philippines Stock Exchange.

    Develops and recommends to the Board of Directors a set of corporate governance principles applicable to the Company.

    Assists the Board of Directors on matters regarding disclosure requirements.

  • Risk Management Functions

    Submits, for the approval of the Board of Directors, a proposed process for conducting an annual review of the Board.

    Reviews qualifications of independent directors.

    Reports and reviews to the Board any issue on the Company’s compliance with legal or regulatory requirements.

    Oversees the system of corporate governance of the Company, including: (i) developing and recommending to the Board a set of corporate governance principles for the Company; (ii) reviewing and reassessing the adequacy of such principles; and, (iii) recommending approval for any such changes to such principles.

    Develops, reviews and monitors the code of conduct and compliance manual.

Compensation Committee

  • Risk Management Mechanism

    Discharges the Board’s responsibilities relating to compensation of the Company’s directors and executives, including recommending to the Board for approval, the compensation plans, policies and programs of the Company.

  • Risk Management Functions

    Makes recommendations to the Board to establish the Company’s general compensation philosophy, incentive-compensation plans and shall oversee the development and implementation of compensation programs and administration of such programs.

Disclosure Committee

  • Risk Management Mechanism

    Develops and implements the Company’s Disclosure Controls and Procedures to ensure that information required to be disclosed is: (i) recorded, processed, summarized and reported accurately on a timely basis; and, (ii) accumulated and communicated to the Company’s management, to allow timely decisions regarding required disclosure.

  • Risk Management Functions

    Determines when disclosure should be made in compliance with applicable law.

    Designs, establishes and monitors controls and other procedures to ensure information is completely and accurately disclosed to appropriate parties on a timely basis to allow timely decisions to be made.

Supervisory Committee

  • Risk Management Mechanism

    Exercise the powers of the Board in the management of the business and affairs of the Company except those powers specifically limited by law or by the Board.

  • Risk Management Functions

    Reviews management presentations on risks assessed and mitigation strategies and actions in progress.