EXCEL FORCE MSC BERHAD Annual Report 2019

EXCEL FORCE MSC BERHAD - ANNUAL REPORT 2019 10 REVIEW OF OPERATIONS The lack of growth catalyst in the local stock market continues to buffet stockbrokers’ business performance. Hence, customers are closely monitoring their cost structure and selective in their IT spend. Their priority focus is on IT projects that improve user experience, fulfil regulatory compliance requirements (e.g. Bank Negara Malaysia’s Risk Management in Technology framework), increase back room efficiencies and achieve lower operational cost. The Group is innovating and enhancing its product and service offerings to meet current customers’ needs, and to further strengthen its leading position in Malaysia. The Group is also looking out for opportunities to expand its presence in Asean countries like Singapore, Thailand, Vietnam and Indonesia. During the year, the Group developed new applications and services that improved users’ experience for mobile share trading, expanded access for trading in overseas stock exchanges, undertook a rapid customisation and deployment of nominee system, provided various technical consultancy to comply with regulatory requirements, and successfully connected our customers to Bursa Malaysia new ISO20022 messaging standards for corporate announcements. The Group monitors its own cost base very closely, more so in this tough business environment. EForce continues to optimise and improve on its resource utilisation, leverage on its deep domain and system knowledge to enhance efficiency in service delivery, eliminate non-value adding activities in our application development process and improve time to market of new and enhanced applications. The business performance of the Group’s subsidiary company, Insage MSC Sdn Bhd has improved. There is increasing demand for outsourcing of listed companies’ investor relation webpages and corporate websites. The Group will continue to capitalize on these opportunities in Malaysia and is concurrently identifying expansion opportunities in overseas market. The Group’s other subsidiary company, E2 Trade Sdn Bhd, is still dormant and not operational in FYE 2019. KEY BUSINESS RISK AND MITIGATION STRATEGIES Changes in government policies, banking regulations, securities regulations and stockbroking rules have an impact to EForce's business and operational performance. The Group continuously monitors trends in regulatory development, and through regular engagements with brokers, regulators and relevant governmental agencies, the Group can better anticipate risks and formulate responses to changes. The Group’s business operation is highly dependent on the stability and reliability of our application solutions, data centre, network infrastructure and equipment. EForce mitigates the operational and system risk through pre-trading system health check, close monitoring of equipment resource use for preventive actions, regular back up procedures to protect business continuity, review and refine our applications for performance improvement. Keeping abreast and updated on technology advancement is critical to ensure timely and effective maintenance of our application solutions, and provide quick response to customers when issues arise. EForce mitigate this risk by providing training and exposure to our employees on relevant technology development, and also update on changes in the broking business landscape to ensure our solutions remain current. The growing threats of cyber-attack to steal data and deny genuine user access to systems requires timely and effective counter-measures. To mitigate this risk, the Group tracks the latest cybersecurity trends and development, and periodically review its system security settings to strengthen cyber-defences. The Group is also in the midst of developing a comprehensive Cyber Security Policy to set a high standard of performance. The detail risk management and internal control are disclosed in Statement on Risk Management and Internal Control (SORMIC) on pages 34 to 36 in this annual report. The framework enables the Board to continuously identify, assess and manage risks that affects the respective business segments within the Group. management discussion and analysis (CONT’D)