Manulife US REIT - Annual Report 2020

Key Risks Details Key Mitigation Actions Property Damage Risk • Significant damage to property as a result of severe events caused by natural and other disasters, human negligence or wilful attack may severely disrupt MUST’s business operations and lead to the loss of rental from tenants. • Each property has adequate insurance coverage for the risks such as all risk, wind, flood, fire, earth movement, gross rent loss, vandalism/public disturbance and terrorism. • With support from its Sponsor, the Manager has in place a global Business Continuity Plan (BCP). This includes policies and procedures that seek to minimise the impact of natural or man-made disasters, and is designed to ensure that key business functions can continue normal operations in the event of a major disruption. • The business continuity team establishes and conducts regular BCP testing. Environmental Risk • Physical risk arises from weather events and long-term or widespread environmental changes, such as climate change, fire and earthquake. • Transitional risk arises from the processes of adjustment to an environmentally sustainable economy, such as punitive actions for polluting the environment and changed expectation from the stakeholders to address environment impact. • The Manager follows the Sponsor’s sustainable real estate policy and works in conjunction with the Sponsor to implement various initiatives to drive a greener future such as environmental management system, green building certification, carbon emissions and energy efficiency. • Assessment of potential acquisition includes examination of environmental and social sustainability risks and opportunities. Pandemic Risk • An epidemic of an infectious disease has spread across a large region, for instance multiple continents or worldwide, affecting a substantial number of people. • This could affect MUST's office business as a result of a decline in office usage and demand, adverse effects on tenants' business, as well as health and safety concerns of our tenants, employees and vendors. • Pandemic risk can have an adverse impact on the business operations, financial results and future prospect, leading to downward valuation of MUST's properties. • The business continuity team establishes and conducts regular BCP testing. • Established playbooks such as Return to Office: Tenant Guidebook and Return to Office: Best Practices Playbook to provide guidance on what needs to be done amidst the COVID-19 pandemic. 61 ANNUAL REPORT 2020