Pursuant to Paragraph 15.26(b) of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (Bursa Securities), the Board is also required to include in the Company’s annual report, a statement about the state of internal control of the listed issuer as a Group. Accordingly, the Board is pleased to provide the Company’s Statement on Risk Management and Internal Control for the financial year ended 31 December 2014 which was prepared in accordance with the “Statement on Risk Management & Internal Control: Guidelines for Directors of Listed Issuers”, endorsed by Bursa Securities. ACCOUNTABILITY OF THE BOARD The Board recognises its principal responsibility of establishing a sound risk management framework and internal control system, as manifested in Recommendation 6.1 of the Code. Accordingly, the Board has entrusted the responsibility of risk management oversight to the MISC Board Audit Committee (“BAC”). In respect of risk management, the BAC is supported by the MISC Risk Management Committee (“RMC”). The Company has a systematic risk management framework adopted from the PETRONAS Risk Governance Framework which is used to identify, evaluate and manage the principal risks of the Group and implement appropriate internal control systems to manage these risks, details of which are set-out in the following pages. In addition to the risk management process, the BAC periodically reviews and/or tests the efficiency and effectiveness of the Group’s internal control system to ensure viability and robustness of the system. In doing so, the BAC is also supported by the Management Audit Committee (“MAC”). In dealing with risks, the Board understands that it is not always possible, cost-effective or desirable to eliminate risk altogether. Accordingly, these internal control systems can only provide reasonable but not absolute assurance against material misstatement or loss, or the occurrence of unforeseeable circumstances. Thus, the Board adopts a costbenefit approach to ensure that the expected returns outweigh the cost of risk controls. RISK MANAGEMENT FRAMEWORK The Company continues to leverage on the PETRONAS Risk Governance Framework to ensure all business risks are prudently identified, evaluated and managed in accordance with acceptable international standards, principles and guidelines on risk management. The framework of risk management comprises the following key elements:- • Risk Management Policy The Group adopts the PETRONAS Enterprise Risk Management (“ERM”) Policy for purposes of identifying, assessing, reporting and monitoring the ever changing risks facing the Group and take specific measures to mitigate these risks. The policy stresses the importance of balancing between risk and reward in making business decisions to protect key stakeholders’ interests, and to comply with statutory and legal requirements. In addition, MISC is represented in the PETRONAS Risk Management Committee which allows the MISC Group to leverage on PETRONAS ERM approaches, standards and current initiatives in implementing Enterprise Risk Management. This platform also allows mutual exchange of information between MISC and PETRONAS to keep abreast of developments in managing risks. In addition, the PETRONAS Risk Management Committee also coordinates group-wide risk management in terms of building risk management awareness and capabilities, monitoring risk exposures and planning responses to potential major risk events. The Malaysian Code on Corporate Governance 2012 (“the Code”) recommends as best practices that the Board establishes a sound risk management framework and internal control system, and disclose in the Company’s Annual Report the main features of the risk management framework and internal control system. MISC BERHAD - Annual Report 2014 p 126 STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL
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