risks is monitored using specific KRIs, which are reported to the RMC, MC and BAC on a quarterly basis. Hence, any changes or movements in the KRIs will provide an early warning mechanism should risk transcend into undesirable levels. • Project Risk Assessment Project Risk Assessment (“PRA”) is conducted for capital intensive projects to ensure that the controls in place and the project returns commensurate with the level of risk taken. During the year in review, RMD undertook PRAs on specific projects and the results were presented to the RMC. The purpose of the PRA is to identify the projects’ risks in advance and implement controls either to reduce or eliminate the risk impact. In addition, Post Implementation Economic Review (“PIER”) was also performed on specific projects/assets to assess whether agreed objectives, targets and returns have been achieved. PIER is an integral process of the entire PRA value chain. • Business Continuity Planning Business Continuity Planning (“BCP”) has been implemented in stages to ensure continuity of critical business functions in the event of disaster. During the year in review, BCP simulations were conducted for critical units to test the effectiveness of the recovery plans and to familiarise staff with the situation of working away from the office. OTHER KEY INTERNAL CONTROL PROCESSES To further enhance the internal control system, the Group’s other internal control processes are as follows:- 1. The Board reviews quarterly reports from Management on key operating performance and legal, environmental and regulatory matters. Financial performance is deliberated by the MC and tabled to the BAC and the Board on a quarterly basis. 2. The Group performs a comprehensive annual planning and budgeting exercisewhich involves the development of business strategies for the next five years to achieve the Group’s vision. The long-term strategies are supported by initiatives to be accomplished in the upcoming year, and for effective implementation, the initiatives are tied to specific measurable indicators which will be evaluated against the relevant business/service units and subsidiaries’ deliverables. The Group’s strategic directions are then reviewed annually taking into account current progress level and other indicators such as latest developments in the industry, changes in market conditions and significant business risks. In addition to that, the Group’s business plan is translated into budgetary numbers for the next five years, and financial performance and variance against budget is analysed and reported quarterly to the MC and the Board. 3. The Limits of Authority (“LOA”) manual provides a sound framework of authority and accountability within the organisation and facilitates sound and timely corporate decision making at the appropriate level in the organisation’s hierarchy. The Board had in the year under review approved broad changes to the LOA manual that caters to the current operational and business needs of the Company, and of the Group. 4. To enhance the quality of the Group’s financial reports, the Group has implemented the PETRONAS Financial Control Framework (“FCF”) initiative. FCF is a structured process of ensuring the adequacy and effectiveness of key internal controls operating at various levels within the Group at all times. FCF requires among others, documentation of process workflows, key controls, remediation of control gaps as well as regular testing of control effectiveness. On a semi-annual basis, each key process owner at various management levels is required to complete and submit a Letter of Assurance which provides confirmation of compliance to key controls for the areas of the business for which they are accountable. 5. The Group continues to practice the PETRONAS Debt Compliance Management (“DCM”) initiative, the objective of which is, to provide assurance that debt covenants of its external borrowings are being observed and complied with. 6. There is a clear procedure for investment appraisal including equity investment or divestment and capital expenditure. MISC BERHAD - Annual Report 2014 p 128 STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL
RkJQdWJsaXNoZXIy NDgzMzc=