Atlas Pearls operates in an environment subject to a range of strategic, operational, financial, and external risks. Effective risk management is integral to the Company’s decision-making and supports the achievement of its strategic and operational objectives.

The Company’s approach to risk management is documented through its corporate risk management framework and Group Risk Register. During the year, the Company completed a comprehensive refresh of its Group Risk Register to provide a more structured and consistent approach to the identification, assessment, ownership, and monitoring of risk across the Group.

The Group Risk Register comprises 12 primary risk categories, with each category assigned to an executive owner responsible for monitoring the risk profile and the effectiveness of key controls and mitigation actions. The risk register is maintained on an ongoing basis, supported by bi-annual management reviews and reporting to the Board on the Group’s risk profile and material changes in risk exposure at each Board meeting.

A comprehensive review of the Group Risk Register is undertaken annually and presented to the Board for approval.

The Board has overall responsibility for oversight of the Company’s risk management framework and monitors the Company’s material risk exposures and management’s response to those risks.

The following material business risks have been identified as those which may have a significant effect on the Company’s operations, financial position, and future prospects. The risks described below are not exhaustive and may change as the Company’s operations and external environment evolve.

(I) CLIMATE AND NATURAL HAZARDS

The Company’s pearl farming operations are geographically dispersed and exposed to weather events, changing ocean and environmental conditions, and natural hazards. These may include severe weather, changes in water temperature or quality, and other environmental events that may affect oyster health, farm infrastructure, vessel access, and production activities.

Such events may result in oyster mortality, damage to infrastructure or vessels, disruption to operations, and increased operating or capital costs.

The Company manages these risks through the geographic diversification of its farming operations, environmental and production monitoring, operating and emergency response procedures, and the maintenance of insurance arrangements where commercially available and appropriate. 

(II) ENVIRONMENTAL AND BIOSECURITY

The Company operates biological production systems that are inherently exposed to environmental degradation, water quality changes, pollution incidents, disease outbreaks, and biosecurity breaches. These factors may adversely affect oyster health, pearl quality, harvest volumes, production costs, remediation costs, and the Company’s reputation.

Atlas Pearls manages these risks through diversified farming locations, continuous monitoring of environmental conditions and oyster health, established production controls, hatchery and genetics programs, biosecurity measures, and ongoing research and development.

(III) FINANCIAL CONTROL AND LIQUIDITY

The timing and value of pearl sales, together with the long production cycle associated with pearl farming, may result in variability in the Company’s cash flows and working capital requirements. The Company is also exposed to inflation, foreign exchange movements, and increases in significant operating inputs, including labour, fuel, materials, and logistics costs.

These factors may adversely affect margins, liquidity and the Company’s capacity to fund operations, capital expenditure, and strategic initiatives.

The Company manages financial risk through budgeting and forecasting, cash flow and liquidity monitoring, expenditure and procurement controls, and regular review of financial performance to support the Company’s capital allocation and funding requirements.

(IV) MARKET, REVENUE AND COMMERCIAL

The Company is exposed to fluctuations in demand and pricing for South Sea pearls. Pearl prices and sales volumes may be affected by global economic conditions, changes in consumer preferences, customer demand, competitor activity, and the timing and composition of pearls available for sale.

A reduction in demand or pearl prices, particularly for specific grades or product categories, may adversely affect the Company’s revenue, profitability, and cash flows.

The Company seeks to manage this exposure through a diversified, multi-channel sales model, ongoing development of customer and market relationships, and active monitoring of sales performance, market conditions, and customer preferences. Sales and marketing strategies, product positioning, and the timing and method of sale are reviewed in response to changing market conditions.

(V) FRAUD AND ETHICS

The Company is exposed to the risk of fraudulent activity, corruption, theft, conflicts of interest or unethical conduct by employees, contractors or third parties, which could result in financial loss, regulatory penalties, reputational harm, and erosion of stakeholder trust.

The Company maintains policies and internal controls addressing fraud, bribery and corruption, and expected standards of conduct. These are supported by financial and procurement controls, delegated authorities, whistleblower arrangements, and internal review processes. While these controls are designed to reduce the risk of improper conduct, they cannot eliminate the risk entirely.

(VI) LEGAL, REGULATORY AND SOVEREIGN

The Company operates predominantly in Indonesia and is subject to laws, regulations, licences and government requirements across the jurisdictions in which it operates. Non-compliance, adverse regulatory developments, or the delay, non-renewal or revocation of permits, licences or approvals could result in penalties, operational restrictions, increased costs, or loss of operating rights.

The Company seeks to manage these risks through established governance and compliance processes, engagement with professional advisers and relevant authorities, and ongoing monitoring of regulatory developments. 

(VII) OPERATIONAL AND INFRASTRUCTURE

The Company’s operations are dependent on vessels, marine infrastructure, logistics networks, key suppliers, and critical equipment. Operational disruptions may affect production, increase costs, or delay deliveries.

The Company manages these risks through preventative maintenance programs, operating procedures, capital planning, supplier diversification, safety and compliance requirements, business continuity planning, insurance arrangements, and ongoing operational oversight.

(VIII) PEOPLE, WORKFORCE AND SAFETY

The Company’s success depends upon attracting, developing and retaining skilled employees while maintaining a safe workplace across geographically dispersed operations.

The Company manages these risks through workforce planning, recruitment and development initiatives, succession planning and remuneration practices. Health and safety risks are managed through the Company’s safety management systems, policies, procedures, training, incident reporting, and ongoing monitoring of workplace practices.

(IX) SOCIAL LICENCE, REPUTATION AND COMMUNITY

The Group’s operations depend in part on maintaining the confidence of local communities, regulators, customers, investors and other stakeholders. Community or NGO opposition, adverse media coverage, or failure to meet ESG commitments could affect regulatory standing, market access, investor confidence and the Company’s reputation.

Atlas Pearls has a longstanding commitment to supporting the communities surrounding its farming operations and to the responsible management of its environmental impacts. Sustainability and social licence risks are incorporated into the Company’s broader risk management framework.

Further information regarding the Company’s sustainability approach and initiatives is contained in the Sustainability Report and Sustainability Roadmap available on the Company’s website.

(X) STRATEGY, GROWTH AND INNOVATION

The Company’s future financial performance is dependent on the successful execution of its strategy, including production improvement initiatives, capital investment, and the development of new products, markets, and commercial opportunities.

Strategic initiatives may not deliver the anticipated operational or financial benefits, may require greater investment than expected or may be affected by changes in market or operating conditions.

The Board and management monitor the Company’s strategic priorities and material investment decisions through established planning, budgeting, and governance processes. The performance of significant initiatives is reviewed against strategic and financial objectives, with priorities and investment decisions adjusted where appropriate.

(XI) SUPPLY CHAIN, LOGISTICS AND ACCESS

The Company relies on the reliability of key suppliers, transport and logistics networks, and access to ports and other government-provided services such as customs and quarantine. Disruption to these dependencies, or the failure of a counterparty under a material contract, could delay delivery, increase costs, or impair the Company’s ability to meet customer demand.

The Company manages these risks through supplier diversification where practicable, contractual risk allocation, and contingency logistics planning.

(XII) TECHNOLOGY, INFORMATION AND IP

The Company relies on information technology systems and data to support its financial, commercial, and operational activities. Cyber incidents, system failures, unauthorised access, data loss or disruption to critical technology may affect business operations, compromise confidential information or result in financial and reputational damage.

The Company manages technology and cybersecurity risk through access controls, system security measures, data backup and recovery processes, technology governance, and ongoing review of its information technology environment. The Company continues to develop its technology and cybersecurity capabilities having regard to the changing nature of cyber threats.