03 / OUR VALUE CREATION APPROACH 01 02 04 05 06 07 08 09 31 KEY RISKS, MITIGATION AND OPPORTUNITIES Operational risk refers to the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events. This definition includes legal risk and Shariah compliance risk but excludes strategic and reputational risks. Mitigation Measures • A robust internal control environment: Establish and maintain effective internal control processes with clear oversight of business and operational activities at all levels, ensuring well-defined reporting responsibilities for all staff. • A comprehensive risk identification and assessment regime: Implement operational risk management methodologies to systematically identify internal and external risk drivers, assess internal control effectiveness and establish robust monitoring processes. • A well-established proactive risk monitoring mechanism: Continuously track and analyse operational risk exposures to support early detection of emerging risks, enabling timely mitigation before they materialise. Opportunities • Effective operational risk management enables the Group to identify and implement resilience controls within business operations by integrating resource planning into business processes, continuously reinforcing risk mitigation measures, and managing risk in a more robust manner. Our Approach The Group adopts a four-pronged approach to operational risk management, primarily involving the following tools: · Operational Risk Management Self-Assessment · Key Risk Indicators · Operational Risk Loss Data · Operational Risk Scenario Analysis Impact to Kenanga Ineffective operational risk management such as gaps in internal processes and disruption to business operations may impede business’s ability to operate effectively. Losses can take many forms, for example: · Financial loss due to halted operations · Damaged reputation · Fines imposed for regulatory non-compliance R4 Operational Risk
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