198 CSE GLOBAL LIMITED NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2023 31. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D) Foreign currency risk (cont’d) Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity of the Group’s profit before tax to a 1% (2022: 1%) change in the USD, GBP, AUD, EUR, NZD and SGD remain exchange rates against the respective functional currencies of the Group entities, with all other variables held constant. Group 2023 2022 Profit before tax Profit before tax $’000 $’000 USD/SGD Strengthened 18 (592) Weakened (18) 592 GBP/SGD Strengthened (67) (72) Weakened 67 72 AUD/SGD Strengthened (58) (124) Weakened 58 124 EUR/SGD Strengthened (339) (3) Weakened 339 3 NZD/SGD Strengthened (40) (2) Weakened 40 2 Credit risk Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables and contract assets. For other financial assets (including other investment and cash and bank balances), the Group minimises credit risk by dealing exclusively with high credit rating counterparties. In respect of credit risk arising from the inability of customers of the Group to make payments when their receivables fall due, it is the Group’s policy to provide credit terms to creditworthy and reputable customers. These receivables are monitored on an ongoing basis to ensure that issues arising from non-collectability are minimised. The Group considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period.
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