KUB Malaysia Berhad Annual Report 2021

(b) To encourage the risk culture and understanding among the employees on the implication of risk exposures, opportunities and threats and respond effectively with the available resources in the day-to-day strategic planning and operational activities; and (c) To ensure that the Framework and process for risk management is integrated with all business and operational processes including governance, strategic and operational planning and decision making. Risk Management Process The System’s risk management approach includes the on-going process of identifying, evaluating, assessing, treating, monitoring and reviewing the risks. The Risk Register ensures that the risks that need to be managed are communicated to the Management for implementation of risk mitigation actions. Risk Factors and Mitigation Strategies The Group identifies and classifies risks based on the level of significance of potential impact, level of likelihood of occurrence and how it may affect the Group’s overall performances. The level of tolerance is expressed through the Risk Impact and Likelihood Matrix with guidance on risk treatment for action to be taken on respective risks. A set of quantitative and qualitative parameters is established aligned with the Group’s risk tolerance to measure the impact at different dimensions. Accordingly, primary risks are identified and continuously assessed with specific mitigation actions to be implemented and monitored to alleviate the magnitude of impact to the Group whilst secondary risks are continuously reviewed and monitored to ensure that the existing controls are effective and efficient without further escalation on the likelihood nor the impact. KEY INTERNAL CONTROL ACTIVITIES The Board is fully committed in ensuring effective internal control in the Group’s business operations both strategically and operationally. The key controls include: Board of Directors The Board, as governed by its Board Charter incorporates risk management in all aspects of the Group affairs with the defined roles and responsibilities and appropriate tools to support the System. The Board sets appropriate policies to ensure the System is functioned effectively in managing risks that may impede the achievement of the Group’s objectives. Board Committees The Board Committees including the BRMC, the BAC, the Board Nomination and Remuneration Committee and the Board Employee Share Option Scheme Committee assist the Board in overseeing and examining all matters within their respective scope of responsibilities and terms of reference. The Board Committees meet on regular basis where any recommendation and minutes of the meeting are tabled to the Board for approval. For more details on the composition of the Board Committees, please refer to the list of Board Committees of this Annual Report. Organisational Structure The Board establishes a defined organisational structure with clear demarcation of responsibility and accountability within the Group that is directly aligned to the business strategy and operational demands. Each operational unit is headed by an individual who is fully accountable to ensure that the business activities are implemented in full compliance to the Group’s objectives and policies. The structure and its function are regularly reviewed to ascertain the effectiveness and if needed, to cater for the changes of business requirements. Limit of Authority The delegation of responsibilities of the Board and the Management as well as the delineation of respective authority limits are defined in the Board-Approved Authority Guides which include KUB Management Guidelines (‘KUBMaG’) and subsidiary specificmanagement guidelines. These provide framework that clearly defines the authority levels for personnel to carry out their assigned responsibilities and creates awareness among the employees with regards to the basic internal control components. Business Plan, Budget, Financial and Operational Review The Group prepares a business plan and budget each year to establish targets against which performances are compared and monitored as well as to facilitate resource allocation by focusing on areas of concerns. The Board and Senior Management review the plan and the budget before its finalisation to ensure it reflect the corporate intent of the Group and strategically align the resource allocation. Subsequently, the BAC together with the Management review the Group’s performance by deliberating the Group’s financial results on a quarterly basis and assess the function of the internal control system before it is tabled to the Board for approval or decision-making process. 37 ANNUAL REPORT 2021 CORPORATE GOVERNANCE