MSM Malaysia Holdings Berhad Annual Report 2019

Risk Management Framework and Process An effective risk management framework seeks to protect an organisation’s capital base and earnings without hindering growth. An overview of the Group’s risk management framework is depicted below: Risk Management Framework Board of Directors Board Governance & Risk Management Committee Sugar Sector Risk Champion Subsidiaries Risk Champions Subsidiaries Risk Owners Establish Context Identify Risk Analyse Risk Evaluate Risk Treat Risk Monitor and Review Communicate and Consult Principally, the Group’s key risk factors are categorised as follow: Main Category Secondary Risks Geopolitical Risks Socio-Politics Legal Infrastructure Catastrophic Risks Environmental Extremes Man-made Disasters Violent Acts Market Risks Macro-Economic Development Sales-Market Development Procurement-Market Development Strategic Risks General strategy Supply chain structure and cooperation Large scale strategic project Reputational Financial Risks Profitability Funding Liquidity Operational Risks Technology, process and organisation Organisation Capability and Human Resource Compliance The Group has in place policies and procedures which are consistent with the ISO 31000 Risk Management Standard, developed to aid relevant personnel in undertaking their risk management responsibilities. The process of risk management adopted by the Group is illustrated below: 99 CORPORATE GOVERNANCE 07

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