Sasbadi Annual Report 2020

SASBADI HOLDINGS BERHAD 126 FINANCIAL STATEMENTS (continued) 26. Financial instruments (continued) 26.3 Financial risk management The Group has exposures to the following risks from its use of financial instruments: x Credit risk x Liquidity risk x Market risk 26.4 Credit risk Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its receivables from customers, whilst the Company’s credit exposure arises principally from its loans and advances to its subsidiaries. There are no significant changes as compared to prior periods. Receivables Risk management objectives, policies and processes for managing the risk Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on customers requiring credit over a certain amount. At each reporting date, the Group or the Company assesses whether any of the trade receivables and contract assets are credit impaired. The gross carrying amounts of credit impaired trade receivables are written off (either partially or full) when there is no realistic prospect of recovery. This is generally the case when the Group or the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. Nevertheless, trade receivables that are written off could still be subject to enforcement activities. There are no significant changes as compared to previous year.