Kimlun Corporation Berhad Annual Report 2018

The main functions and duties of the RMC include, but are not limited to: (i) Provides oversight, direction and counsel to the Group risk management process which includes: • Evaluating and identifying new risks; • Reviewing and updating the Risk Register and ensuring that significant risks are being responded to appropriately; and • Monitoring the Group’s risk exposures and ensuring the implementation of management action plans to mitigate significant risks identified (ii) Evaluates the effectiveness of the risk management processes and support system to identify, assess, monitor and manage the Group’s key risks; (iii) Meets with senior management on a semi-annual basis to discuss and deliberate on the significant risks affecting the Group within the context of the business objectives and strategy; (iv) Establish Group risk management guidelines and policies and ensure implementation of the objectives outlined therein and compliance thereto; (v) Recommends for the Board’s approval, the Group risk management policies, strategies and risk tolerance levels, and any proposed changes thereto; (vi) Reviews significant investment proposals A risk management report is tabled for AC and Board discussion annually or at shorter intervals where necessary. The report identifies principal risks affecting or are likely to affect the Group, and the appropriate systems or actions to manage the risks. The key risks and some of the control measures for FY2018 are set out below: Risk area Operational Risks • As in any business, the Group is subject to operational risks. Credit, financial and liquidity risks • The Group faces the threat of delays in payment by customers for work done which will eventually affect the Group's cash flow, and heighten the risks of debts becoming unrecoverable. Control measures taken to mitigate the risks • Organisation structure outlining the lines of responsibilities and authorities for planning, executing, controlling and monitoring the business operations. • Periodic operational review meetings attended by the Executive Directors, heads of departments and key management staff to consider financial and operational risks and issues of the Group as well as any management proposal. • Monitoring of actual performance against annual budget by the Board. • Relocate loyal and experienced employees to lead branches’ operations. • Engagement of specialist to provide consultancy services for technically complicated works • Formalised whistle blowing policy, code of conduct and written policies and procedures on major processes to ensure compliance with internal control systems and relevant laws and regulations. • Appointment of staff based on the required level of qualification, experience and competency. • Background check of prospective customers prior to accepting any engagement from such parties. • Close monitoring of collection by the finance department with weekly updates to the senior management as to collection received and incidence of delay. • Timely follow up with the customers on overdue payment and retention sum. • Avoid over concentration of sales and credit exposure to any customer to prevent over-dependence on any customer. • Actively monitor the Group’s banking facilities to ensure the facilities are sufficient to meet the Group’s working capital and capital expenditures requirement, and negotiate with bankers for credit facilities features which enable greater flexibility in the Group’s financial resources management. Annual Report 2018 48 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (cont’d)