HKUST Annual Report 2019-2020

Financial Risks Being a publicly funded university, it is important to achieve and maintain financial sustainability, able to support the University’s operations, capital expenditures and strategic initiatives in the long term. On top of the major source of funding from the HKSAR Government, there are other sources of funding such as donation and self-financed activities. Due to the impact of COVID-19 pandemic on business environment and international travel and social unrest within Hong Kong, the outlook for some funding sources is uncertain. As such, management has implemented some sensible cost reduction measures and will exercise caution in financial planning, so as to maintain a sound and healthy financial status for the University. In addition, a team of professional external advisors and investment managers is engaged to assist in the management of investment portfolio to safeguard the University’s interest as well as to generate investment return for the working capital. Risks arising from investment activities in the financial markets are mitigated by a diversified investment portfolio governed by the investment strategy with acceptable risk and return objectives approved by the Council and continuous monitoring of performance of investment portfolio by management and the professional advisors. Please refer to the University’s financial statements for details. Operational Risks Management continues to uphold and promote the University’s objective of providing a safe and sustainable campus that is also inclusive, caring and inspirational for all University students and staff to work, study and live. In the midst of COVID-19 pandemic, it is achieved through implementing additional campus-wide health, safety and security measures including new campus hygiene measures, quarantine arrangements, flexible work arrangements and online teaching. Management, in coordination with academic and administrative offices, has put in place mitigating actions efficiently and effectively to address operational risks caused by the COVID-19 pandemic, including the implementation of social distancing and adoption of online teaching. Management has continued efforts to attract quality faculty and students through various initiatives at University, school and program levels. By recruiting the high caliber academic leader and prospective students of diverse background, achievement of the University’s strategic objectives in becoming a university of choice for talents, leader in education and research, exemplar of best-in- class standards and operations, the powerhouse for innovation and entrepreneurship and a champion of diversity could be maintained and accelerated. As part of theUniversity’s long termstrategic planning, management has planned risk mitigating activities to continue to allocate resources in the development and renewal of campus facilities, IT system and network, cybersecurity, safety and sustainability of University environment. There are also continuous efforts to attract and retain the best administrative talents as well as to streamline administrative processes and systems for efficiency improvement and digitalize legacy manual processes and procedures. 64