Chemical Company of Malaysia Berhad Annual Report 2019

| STATEMENT ON RISK MANAGEMENT | AND INTERNAL CONTROL OVERVIEW OF OUR RISK MANAGEMENT APPROACH Effective risk management is an essential part of Chemical Company of Malaysia Berhad Group of Companies (“Group”) business model with the objective of pursuing opportunities within the risks, and minimises the potential impacts in the event that the risks are crystallised. It also protects the Group’s reputation whilst ensuring profitability and sustainability. The Group’s risk management approach is strongly embedded in the Group’s strategy, whereby the achievement of the Group’s strategy requires a strong risk-centric approach to ensure the Group is fully aware and prepared for myriad of risks possibly faced by the business. This approach thus underpinned by robust internal controls and structured framework which are prerequisites to the achievement of the Group’s business objectives. RESPONSIBILITY The Group Board acknowledges the principal risks associated with the Group’s business and recognises that business decisions may require taking an appropriate level of risks. Therefore, the Board shall ensure that there is system in place which effectively monitor and manage these risks. For areas relating to risk management and internal controls, the Board holds the overall responsibility over the establishment and oversight of the adequacy and effectiveness of the Group’s risk management and internal controls systems, which includes financial, operational and compliance controls. Whilst the establishment of the risk management and internal controls systems places the importance of managing the businesses’ key risks within the approved risk appetite, the Board acknowledges that the systems are designed to mitigate and minimise, rather than eliminate the risk of failure to achieve business objectives. Accordingly, it can only provide reasonable and not absolute assurance against material misstatement or loss. RISK MANAGEMENT AND INTERNAL CONTROL GOVERNANCE The role of overseeing and maintaining the risk management and internal control systems, to ensure that they are adequate and effective, are held by the following: i. Risk Management Committee (RMC) The RMC oversees the implementation of the risk management, which is put in place to manage the risk exposures of the Group within the approved risk appetite. Thus RMC is tasked to direct and oversee the formulation of a structured mechanism in the Group to inculcate strong governance, ethical, integrity and risk management culture within the Group. On a quarterly basis, RMC reviews the results of the risk assessments and treatments, and subsequently reports to the Board on key matters in relation the implementation of the risk management system. ii. Audit and Compliance Committee (ACC) The ACC is responsible for overseeing the internal control systems (including integrity matters) of the Group, and determining that all major issues reported by the Group Internal Auditor, the external auditors and other outside advisors have been satisfactorily resolved. ACC assesses the effectiveness of the system of internal control vis-à-vis the risks, control environment and compliance requirement of the Group. Finally, the ACC reports on a quarterly basis to the Board on all important matters pertaining to the Group’s controlling processes. 102 CHEMICAL COMPANY OF MALAYSIA BERHAD