Serba Dinamik Annual Report 2018

156 ANNUAL REPORT 2018 SERBA DINAMIK HOLDINGS BERHAD Introduction The Board of Directors (“Board”) is committed to maintain a sound risk management and internal control system, pursuant to Chapter 15 of the Main Market Listing Requirements. The following statement outlines the essence and scope of the Group’s risk management and internal control in Year 2018. Board’s Responsibility The Board, whilst acknowledging its responsibility, recognizes that risk management and internal control system are designed to manage, rather than eliminate, the risks that may impede achievements of the Group’s business goals and objectives. Therefore, the system can only provide reasonable, but not absolute assurance, against occurrence of any material misstatement, fraud or losses. To ensure adequacy, effectiveness and integrity of the Group’s risk management and internal control, the Board has maintained full control over governance, strategic, financial, organizational, operational, regulatory and compliance and has put in place formal lines of responsibility and delegation of authority. The review of risk management and internal control environment and processes is delegated by the Board to Audit & Risk Committee (“ARC”). In specific, for Enterprise Risk Management, ARC provides oversight on risk management matters relating to activities of the Group, in respect to review, appraise and assess the efficacy of controls and progress of action plans taken to mitigate, monitor and manage overall risk exposure of the Group. For Internal Control, ARC reviews adequacy and effectiveness of internal controls in relation to the audits conducted by the Group Internal Audit (“GIA”) function during the year. Audit issues and actions taken by Management to address the findings tabled by GIA were deliberated during the ARC meetings. In summary, Internal control and risk-related matters which warranted attention of the Board were recommended by the ARC to the Board for its deliberation and approval and matters or decisions made within the ARC’s purview were escalated to the Board for its notation. Key Risk Management Elements The Group’s risk management system comprises the following key elements: 1. Risk Management Framework One of the key features of the risk management environment is the implementation of ERM Framework for the management of risk. 2. Materiality Assessment Pursuant to the recommendation of Bursa Malaysia’s Sustainability Reporting Guide, an organization should reconsider its material sustainability risks and opportunities (i.e.sustainability matters) at least once a year. This it to ensure that the sustainability matters being managed and reported remained significantly important to its business and are aligned to stakeholders’ needs. The Group undertook a materiality assessment in 2018, comprising a series of focus group sessions, interviews and an online materiality survey with various key internal and external stakeholders. 3. Risk Management Function The risks are viewed and managed on a Group-wide basis and driven by a designated Risk Management Function. STATEMENT OF RISK MANAGEMENT & INTERNAL CONTROL