MISC BERHAD INTEGRATED ANNUAL REPORT 2025 08 09 10 01 02 03 04 05 06 07 12 13 SEC 11 GOVERNANCE 10 220 www.miscgroup.com 221 www.miscgroup.com #deliveringProgress STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL The MRC holds quarterly meetings to review key risks and to ensure that mitigation plans are in place to manage such risks. The adequacy and effectiveness of the controls, as well as the robustness of the mitigation actions, are also assessed. These are then further deliberated at the BSRC and finally reported to the Board on a quarterly basis. During the year, the Terms of Reference for both the BSRC and MRC were reviewed and updated to ensure alignment with evolving governance standards and to integrate reporting requirements related to sustainability risks. These updates aim to strengthen the Board and Management’s oversight and embed sustainability considerations in the overall risk management framework. Risk Management and Resiliency The Group adopts the PETRONAS Resiliency Model which provides an integrated view of managing risks effectively with a primary focus on three (3) areas of business resilience as shown below: MISC Resiliency Model Enterprise Risk Management To reduce the likelihood and impact of the identified risks that may affect the achievement of business objectives. Crisis Management To prepare the Group to respond and manage crisis in the risk areas, to protect people, environment, assets and reputation. Business Continuity Management To build the capability of the Group to recover and continue the operations of critical business functions in the event of disruptions. Board • Responsible to review and approve the Group’s strategic plans, targets and policies proposed by the Management. • Responsible to review the setting and approve the Group’s Risk Appetite and principal risks. • Responsible for establishing effective risk management and internal control framework, systems and activities. BSRC • Reviews the adequacy and effectiveness of Group’s risk management framework and its activities. • Oversees the risk appetite and its tolerance levels. • Oversees the ERM reporting focusing on strategic and business risks, including sustainability related risks. • Reviews and recommends to facilitate risk-based decision-making for strategic and high impact transactions. MRC • Provides guidance and direction in the implementation of ERM Framework and its activities across the Group. • Reviews and monitors principal risks, including material sustainability related risks. • Reviews, deliberates and recommends to the BSRC for endorsement and Board’s approval of policies and strategies on risk management. The Group’s Risk Management practices are continuously assessed for enhancements, and these are supported by the relevant risk management frameworks and guidelines to govern and guide the risk management practices across the Group. STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL ENTERPRISE RISK MANAGEMENT Risk Policy MISC’s Risk Policy guides the overall best practice of identifying, evaluating, managing, reporting, and monitoring the ever-changing risks faced by the Group as well as the specific measures to mitigate these risks. The emphasis is to effectively reduce the impact of risks, respond to immediate risk events and recover from prolonged business disruption to ensure continuity and sustainability of key business activities as well as the delivery of strategic and business objectives. It also outlines the general principles for making risk-based decisions, thus strengthening the MISC Group’s position as a risk-resilient organisation. MISC is committed to become a risk-resilient organisation. MISC shall continuously strive to implement: • Risk management best practices to protect and create value within the set boundaries; and • Risk based decision-making by providing a balanced and holistic view of exposure to achieve business objectives. Managing risk is everyone’s responsibility. Risk Appetite The Group’s Risk Appetite defines the acceptable level of risk and boundaries that the Group is willing to assume in pursuit of its strategic and business objectives. The Group’s Risk Appetite is demonstrated by way of Risk Appetite Statements which express the organisation’s context for managing and taking risks. This is further supported by Risk Tolerances and Thresholds, which reflect the maximum risk that can be undertaken with a metric that can be measured and managed. The Group’s Risk Appetite is integrated into the MISC Business Plan, Strategic Priorities and Group’s decision-making process to enable the Group to navigate the risk landscape and build resilience as we pursue our business objectives. For the year under review, the Group’s Risk Appetite was approved and monitored, covering five key areas in line with the business strategies and performance expectations. The Risk Appetite statements, tolerances and thresholds were systematically reviewed and refreshed to ensure their continued relevance in a changing operating environment. The review involved assessing the adequacy and relevance of existing thresholds considering emerging and strategic shifts as well as incorporating feedback from Management and the Board. The updated Risk Appetite, endorsed by MRC and the BSRC and subsequently approved by the Board, was actively monitored and reported throughout the year. Risk Appetite Area Statements Tolerance Strategic Investment Returns Maximise capital efficiency while maintaining balance between risk and reward, consistent with the business strategy and shareholders’ expectations Limited Tolerance Emissions Committed to reducing GHG emissions in line with MISC’s Net-zero trajectory Limited Tolerance Financial Cash Flow Maintain a solid cash flow from operations to meet and support business objectives Limited Tolerance Cost of Debt Manage the cost of debt of the Group at a level that protects the Return on Equity Limited Tolerance Liquidity Maintain a robust liquidity position in pursuing business objectives Limited Tolerance Leverage/Gearing Ratio Maintain a gearing ratio commensurate with investment grade Limited Tolerance
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