Dagang NeXchange Berhad Annual Report 2019

DAGANG NeXCHANGE BERHAD 70 INTRODUCTION This statement on risk management and internal control pursuant to paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, with guidance from the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers. The statement outlines the nature and scope of risk management and internal control system of the Group during the year under review. RESPONSIBILITIES AND ACCOUNTABILITIES The Board recognises its overall responsibility for the establishment of a sound risk management and internal control system for the Group and periodically reviews its adequacy and effectiveness. The adequacy and effectiveness of these systems assists in safeguarding the Group’s assets, shareholders’ investments and stakeholders’ interests. Acknowledging that having a sound risk management and internal control system is imperative, the Board has established a governance structure that ensures effective oversight of risks and internal controls within all levels of the Group. Considering the inherent limitations, internal control systems can only provide reasonable, but not absolute, assurance against any material financial misstatement, fraud or losses. In assessing and monitoring key business risks, the Board governs the Group’s level of risk tolerance and risk appetite taking into account the dynamic and challenging business environment and increasing regulatory scrutiny to stay relevant and competitive. The Board partakes in the annual review of the Group’s strategic business planning process. The Board probes the Management to ensure they have taken into consideration the varying opportunities and risks in developing the annual strategic business plan and investment proposals. Decisions are made by the Board only after the required information is adequately presented and deliberated to facilitate appropriate oversight and direction of the Group. The Board is assisted by the Board Audit Committee to ensure independent oversight of internal control and risk management matters. Throughout the financial year, the Audit Committee convene meetings on quarterly basis to review the adequacy and integrity of the Group’s: i. Financial information namely annual audited financial results, Annual audit planning memorandum and Quarterly report on unaudited consolidated financial results; ii. Risk management report and mitigation action plans for identified risks; iii. Quarterly reports on internal audit reviews and annual internal audit plan; iv. Effectiveness of the internal controls systems including compliance to applicable laws, rules and regulations, directives and guidelines through the audit reports issued by the appointed auditor. The committee also review and approve the internal auditor’s appointment and the annual internal audit plan and results; and v. Related Party Transactions and Recurrent Related Party Transactions. Other Board Committees such as the Nomination and Remuneration Committee, Board Procurement and Tender Committee as well as Employee Share Option Scheme Committee are also established to assist the Board in executing its governance and oversight function as delegated by the Board. These Board Committees have been assigned with clearly defined accountabilities and responsibilities to oversee various key business activities within the Group. In addressing the material risks within the Group’s business environment, the internal control systems however do not apply to our associate companies, which fall within the control of their majority shareholders. Nonetheless, DNeX’s interests are served through representation on the Boards of Directors and Senior Management posting to the associate companies as well as through the review of management accounts received. These provide the Board with performance related information to enable informed and timely decision-making on the Group’s investments in such companies. STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL