4. Risk management “ Directors should have a sound understanding of the material risks faced by the issuer and how to manage them. The Board should regularly verify that the issuer has appropriate processes that identify and manage potential and material risks.” TCFD category Recommendation Summarised in this document at Risk management Disclose how the organisation identifies, assesses and manages climaterelated risks. 4.1 Describe the process for identifying and assessing climate risks. 4.1, 4.2 Describe processes for managing climate risks. 4.1, 4.3 Describe how processes for identifying, assessing and managing are integrated into overall risk management. 4.1, 4.3 4.1. Identify, assess and manage climate-related risks The Company follows a robust Risk Management System Framework. Climate risks are considered alongside other business risk and recorded in the central risk register, which evaluates controls, assigns ownership, and tracks treatment plans. These risks are regularly reviewed, considering operational factors, industry insights, peer information, shareholder feedback, regulatory changes, and internal analysis by staff and contractors. Oversight of climate risk management occurs through internal reviews by the board’s Operational Risk and Sustainability committee. The Chief Executive bears responsibility for climate risks, including those affecting individual assets and financial investments related to climate change. Cue assesses potential climate-related risks under various headings: – Policy and Legal – Physical (acute and chronic) – Financial and Market – Social/Political/Regulatory – Technological These risks carry financial and operational implications, potentially impacting profitability. However, financial and market risks, along with social/political risks, also offer opportunities, including a higher adoption of natural gas as partner to renewable energy and as a lower-carbon alternative to coal. For further details on risk types and controls, refer to section 4.3. 4.2. Calculating Climate risk In New Zealand, the Emissions Trading Scheme sets a market based price for carbon emissions. New Zealand Units (NZUs), representing one metric tonne of Carbon dioxide, or the equivalent of any other greenhouse gas are purchased by Cue and surrendered for the Maari production asset. For future sensitivity testing we model an NZU price and emissions forecasts. In Australia, no current mandated carbon pricing mechanism exists for Cue emissions. Project and investment economics are tested based on a range of potential carbon pricing outcomes. Similarly, in Indonesia, the current carbon cost mechanism does not apply to Cue’s operations. We monitor a range of potential climate-related policies and conditions for their effect on asset value and operation. For physical risks to all our asset interests, the Company has comprehensive insurance and regularly participates in technical review meetings that assess engineering risks to plant. Due to uncertainty about future carbon pricing mechanisms and the rapidly changing policy positions in some countries where the Company operates and investigates new projects, carbon price testing is undertaken using the most available information and estimates at the time. Taskforce on Climate–Related Financial Disclosures (TCFD) Statement continued 20 Cue Energy Resources Limited Annual Report 2024
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