Risk Management Framework (Cont’d) (b) Financial Risks (i) Credit and liquidity risks arise from the inability to recover debts in a timely manner which may adversely affect the Group’s profitability, cash flow and funding. In order to minimize such exposures, tightening of credit control, close monitoring of collections and overdue debts were carried out. (ii) Interest rate risk arise mainly from the Group’s borrowings in the form of term loan, overdraft and revolving credit facilities to meet capital expenditures and working capital requirements. (iii) Commodity risk arises from the volatility of commodity prices such as crude palm oil (“CPO”) and palm kernel which are affected by factors such as weather, government policies, supply and demand and competition from substitution products as well as currency fluctuation. (iv) Foreign exchange risk arises from movements 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 RM, 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. 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 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 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 2023, the RMC has: 114 MKH BERHAD | ANNUAL REPORT 2023
RkJQdWJsaXNoZXIy NDgzMzc=