Kimlun Corporation Berhad Annual Report 2018

Kimlun Corporation Berhad 49 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Risk area Market risks • The Group operates in a competitive environment and failure to compete effectively against its existing competitors and new market entrants will affect its performance Human resource risks • The Group believes its future success largely depends on the Group’s ability to hire, develop, motivate and retain competent employees and key personnel. The Group’s key management team may be difficult to replace as they have been instrumental in the development, growth and success of the Group Control measures taken to mitigate the risks • Established quality control procedures and project tendering guidelines to ensure quality services and products to customers, and cost efficiency. • Nurture close relationship with customers, sub-contractors and suppliers. • Establish wide range of services and products to diversify product risks and reduce reliance on any particular services or products for revenue. • Focus in more technical demanding products and services to create a market niche or speciality. • Bid for projects jointly with parties which have complementary strength to the Group. • Diversify base of customers, sub-contractors and suppliers. • Succession planning in human resources. • Competitive remuneration packages to attract talents. • Appropriate training and development to nurture and groom existing staff force. • Internship program for university students to identify potential talents that the Group can employ. INTERNAL CONTROL The Group has established an organisation structure outlining the lines of responsibilities and authorities for planning, executing, controlling and monitoring the business operations aligned to business and operations requirements which supports the maintenance of a strong control environment. It has extended the responsibilities of the AC and of the Board to include the assessment of internal controls through the internal audit function. Other key elements of the system of internal control of the Group are as follows: - • The Board established a hierarchical organisation structure with proper segregation of duties for key functions of the operations of the Group; • Delegation of authority including authorisation limits at various levels of management and those requiring the Board’s approval are clearly defined to ensure accountability and responsibility; • Standard operating procedure manuals set out the policies and procedures for day to day operations to be carried out. Reviews are performed to ensure that documentation remains current, relevant and aligned with evolving business and operational needs; • Formation of committee to evaluate and approve related party project tenders; • Appointment of staff is based on the required level of qualification, experience and competency to fulfil their responsibilities. Training and development programmes are carried out to ensure that staff are kept up to date with the necessary competencies and knowledge to carry out their responsibilities towards achieving the Group’s objectives; • There is an annual budgeting process. The Board reviews the actual performance against budget; • Regular and comprehensive information are provided to the Board for monitoring and tracking of performance of the Group; • Periodic operational review meetings are held and attended by the Executive Directors, heads of department and key management staff to consider financial and operational issues of the Group as well as any management proposal; • Active involvement of directors in the operation and management of newly set up branch and subsidiary companies; • Centralised control of financial resources by head office of respective subsidiary companies; • Formalised whistle blowing policy and code of conduct are established to ensure high standards of conduct and ethics in the business operations; (cont’d)