• Risk Governance Structure The RMC was established to review and monitor the Group’s risk management and practices. It consists of mainly Vice Presidents and Heads of key service units, and is primarily responsible for driving the Risk Management Framework and acts as the central platform for the Group to undertake the following responsibilities: • Assist the Management in identifying principal risks at Group level and providing assurance that the ERM is implemented group-wide to protect and safeguard MISC interest; • Review and recommend policies and frameworks specifically to address risk inherent in all business operations and environment pertaining to the Group; and • To provide a reasonable assurance to the BAC that the Group’s risks are being managed appropriately. Risk management activities are undertaken at corporate and business units/subsidiaries levels and risk reports are reviewed and monitored by the Risk Management Department (“RMD”) on regular intervals prior to escalation to RMC. Each appointed risk focal person has the responsibility for risk management activities in their specific department/unit to ensure consistent implementation of risk management processes across the Group. The RMC meets on a regular basis to update any risk management issues to the Management Committee (“MC”), President/CEO and BAC, which then updates the Board. To ensure the integrity of financial risk management, the Finance Risk Management Unit continues to monitor and ensure effective and robust implementation of the financial risk management through the implementation of the PETRONAS Corporate Financial Policy (“CFP”). The CFP supports the delivery of consistent approach in financial and risk management discipline across the Group. The CFP is supplemented with Guidelines in the areas of Integrated Financial Shared Services Centralisation, Liquidity Management, Cash Repatriation, Financing, Investment, Banking, Asset Liability Management, Foreign Exchange Management, Credit, Group Tax Management, Inward Financial Guarantee and Documentary Credit and Financial Risk Management. The Group has established its Financial Risk Appetite Setting (“FRAS”) in the areas of Interest Rate Risk, Foreign Exchange Risk and Financial Institution Credit Counterparty Risk which provides early warning signals through the monitoring of Financial Risk Appetite Scorecards and its Key Risk Indicators (KRIs). The Group is also represented by invitation in the PETRONAS Financial Risk Management Operational Committee (“FRMOCO”) which is commissioned to address financial risk management, governance and operational issues in a holistic manner. RISK MANAGEMENT PROCESS The risk management process in MISC requires management to identify business risks at strategic, operational and tactical levels, and assess these risks in terms of likelihood and magnitude of impact, as well as to identify and evaluate the adequacy of mechanisms in place to manage these risks. This process involves assessments at business unit level before being examined on a Group or strategic perspective. The following summarises the key risk management activities undertaken during the year under review: • Embedding risk management into strategy planning The Board acknowledges the significance of managing key risk events to sustain the achievement of business objectives. In ensuring efficient and effective integration between risk management and business performance, risk profiles for Business Units (“BU”), key Service Units (“SU”) and key Subsidiaries (“Subs”) are subjected to an annual review with the emphasis in linking risks to MISC’s business objectives. In addition, KRIs were reviewed and identified to monitor the movement of risks throughout the year, thus enabling the management to act and take necessary measures in managing risks thus ensuring business objectives are met. • Continuous Monitoring via Risk Reports During the year, Management continued to rely on Risk Reports to monitor the level of risks in relation to the acceptable risk appetite. Risk Reports are derived from the BU/SU/Subs risk registers after risk events have been prioritised by level of significance and severity of impact to business objectives. The performance of these key p 127 MISC BERHAD - Annual Report 2014
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