The framework of risk management comprises the following key elements:- • Risk Management Policy The Group adopts the PETRONAS Risk 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 effectiveness in responding to crises and incidents, as well as ability to restore and ensure continuity of key business activities in the case of prolonged disruption. In addition, MISC is represented in the PETRONAS Risk Management Committee which allows the Company to leverage on PETRONAS Resiliency Model approaches, frameworks and current initiatives in implementing ERM. This platform also allows mutual exchange of information between the Company and PETRONAS to keep abreast of developments in managing risks. The PETRONAS Risk Management Committee also coordinates groupwide risk management efforts in terms of building risk management awareness and capabilities, monitoring risk exposures and planning responses to potential major risk events. • Risk Governance Structure The RMC was established to review and monitor the Group’s risk management practices. It consists of mainly Vice Presidents and Heads of key service units, and is primarily responsible for driving implementation of 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; • Review, deliberate and recommend mitigation actions to ensure that the Group’s risks are being mitigated effectively; 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 and dedicated 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 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 execution of 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, Tax, Inward Financial Guarantee and Documentary Credit, and Integrated Financial Risk Management. The Group has established its Financial Risk Appetite Setting (“FRAS”) in the areas of 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. The Interest Rate exposures were continuously monitored on case to case basis for each borrowings. 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. MISC BERHAD Annual Report 2015 113
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