Yinson Annual Report 2018

iii. Project cost overrun As FPSO projects are typically long-term in nature, any project cost overrun would cause a negative impact on the project profit margins and affect the cash flow of the Group. Mitigation: The Group is continuously reviewing and improving its project cost management to ensure that all ongoing and future projects are executed within budget. iv. Investment evaluation risk Ineffective evaluation on potential investments would lead to the wrong investment decisions and lead to poor returns on the said investments. Mitigation: The Group is looking into enhancing its investment policy and procedures to ensure that its investment evaluation process is effectively managed within a structured assessment process. v. Corporate funding risk Corporate funding is necessary to cover the working capital costs, equity injection and debt servicing of the Group. Inability to secure the necessary funding may lead to the Group defaulting on its debt obligations or failure to meet its repayment schedules. Mitigation: The Group will continue to enhance its corporate funding plan, assessing its financial position and funding gap. The Group will explore various avenues and programs to raise funds for its business operations and financial obligations. 2. Internal Control Structure The key elements of the Group’s internal control structure are described as below: • Documented Policies and Procedures Internal policies and procedures are established and documented in manuals, which are reviewed and revised periodically to meet changes in business, operational and mandatory requirements. Prior to the implementation of internal policies and procedures throughout the Group, such documents are tabled to the MC for the first review. Once the MC approves the documents, the same will be tabled to the Audit Committee, together with the Board, for final review and approval. • Line of Reporting and Responsibility The organisation structure includes defined lines of reporting and delegation of authority (including limit of authority), responsibility and accountability to the Board Committees (including the Audit Committee) and the business units. Besides the established Board Committees, the Board is supported operationally by the MC which consists of senior members of the organisation including the Group Chief Executive Officer and Group Chief Strategy Officer. • Experienced Management Team The Board relies on the executive management team, whom sits in the MC of the Group, possessed with rich industry experiences to lead and manage the business of the Group on an overall basis. The MC and management team actively participates in the day-to-day tasks to plan, operate and manage the operations and strategy of the Group in achieving its objectives within the boundaries of the Group’s risk register and risk matrix. The scope of responsibilities, duties and authorities of the MC are defined within its Terms of Reference, as approved by the Board. • Review and Monitoring Process The MC conducts quarterly monitoring and review of the Group’s operations and performance, including financial results and forecasts for all business operations within the Group. From the monitoring and review process, the MC provides updates to the Board and Audit Committee for their deliberation. Corporate Overview Stewardship Governance Accountability 79 Yinson Holdings Berhad Annual Report 2018