Chemical Company of Malaysia Berhad Annual Report 2019

The overall process is facilitated by the Group Risk Management Unit, which is the second line of defense for the Group. The Group has an Executive Risk Management Committee, which is embedded in the Group Management Committee, to provide oversight and added impetus to the risk management process. Finally, the process is subjected to quarterly review by the Board, via the RMC. The internal audit function, which is carried out by the Group Assurance Unit, serves as the third line of defence by providing independent assurance on the effectiveness of the risk management processes. INTERNAL CONTROL FRAMEWORK Management has put in place internal controls to ensure that the Company’s objectives are achieved through adequate mitigation of the identified risks. The key elements of the Group’s system of internal controls are described below: Board Committees The delegation of responsibilities to the various committees of the Board of Directors is clearly defined. At present, the committees which are established are the Audit and Compliance Committee, Nomination and Remuneration Committee, Finance and Investment Committee and Risk Management Committee. The respective Board Committees are tasked to assess the risk management aspects, control environment and alignment to the overall Group’s risk appetite in relation to performing their duties as indicated in the Board Committee’s Terms of Reference. Assignment of Authority and Responsibility The Board has approved a defined and documented Limits of Authority (LOA) which is used consistently throughout the Group. These LOAs specify clear division and delegation of responsibilities as well as authorities from the Board to the Board Committees and to members of Management, and the authorisation levels of various aspects of operations. Clearly defined LOA within a divisionalised organisation structure have also been established to facilitate the supervision and monitoring of conduct and operations of individual business units and support services departments. These were reviewed and updated in prior year to resolve operational effectiveness and challenges and to reflect the changing risks. Additionally, the Group has a Project Review Committee, which is embedded within the Group Management Committee, to provide added assurance to the Finance and Investment Committee in the feasibility evaluation of project/investment proposals and subsequent evaluation of the progress and results of endorsed project/investment through a process of due scrutiny. Planning, Monitoring & Reporting The Group undertakes a strategic and budgeting planning process annually, to establish plans and targets against which performance is monitored. These business plan and budgets are subjected to evaluation and assessment by the Senior Management Group and the Finance and Investment Committee before it is recommended to the Board for approval. Monthly review is carried out by the Divisions and Group Management Committee to ensure that the businesses are operating according to the plans, as well as to monitor adherence to the internal control procedures established. Quarterly financial and operational reports are tabled and presented to the Board providing financial information including key performance and risk indicators. The information is reviewed by the Audit and Compliance Committee before it is presented to the Board for consideration and approval. | Statement on Risk Management Committee | and Internal Control 104 CHEMICAL COMPANY OF MALAYSIA BERHAD