MKH Annual Report 2020

73 MKH BERHAD Risk Management Framework (Cont’d) (ii) Financial Risks (Cont’d) (d) Foreign exchange risk arising frommovements in foreign currency exchange rates. The Group’s reporting currency is Malaysian Ringgit (“RM”). The majority of the Group’s plantation division borrowing is denominated in United States Dollar (“USD”), while the majority of the Group’s expenses is denominated in Indonesian Rupiah (“IDR”) and sale of CPO and palm kernel is denominated in IDR. As the CPO is an internationally traded commodity mainly in USD, there is a natural hedge as the selling price of the CPO in IDR has a positive correlation with the strengthening of the USD currency. In addition, the Group constantly monitors and compare the selling price of CPO in the local Indonesian market (in Rupiah) and the Malaysia Derivatives Exchange (in RM) and the foreign exchange rate to ensure that the Group is selling the CPO at the best possible price. The Board with the assistance of the Audit Committee, RMC and Internal Audit team have continuously review existing risks and identify new risks that the Group faces and management action plans to manage the risks. To further enhance the risk management process within the culture of the Group, review of existing risks and identification of new risks is also conducted annually with involvement of selected management staff. In additions, nominated key management personnel in each business unit have prepared action plans to address key risks and control issues highlighted by the Internal Audit team. During the financial year ended 30 September 2020, the RMC has: • reviewed management action plans presented by the nominated key management of certain business units of the Group; • reviewed the Group’s quarterly financial and non-financial performances measured against the approved budget with major variances being reviewed and management actions taken as necessary; • reported its findings on major issues relating to risks and risk management to the Audit Committee on quarterly basis which then reports to the Board; • reviewed new property development projects and business investment in the subsidiaries; • reviewed quarterly the property development outlook with appropriate product differentiation and pricing to suit the market demand; and • monitored financial performances and the progress of corrective actions/implementation for highlighted issues. Statement on Risk Management and Internal Control