GROUP RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM (Cont’d) 4. Merchant Risk (Cont’d) During the year, Group Risk exited certain high-risk merchants because of its review of transaction exceptions, evidencing the veracity of the M-Cube Risk Management system in detecting high risk merchant behaviour. Management has continuously kept abreast of these reviews and findings via the monthly business reviews. Group Risk also continues to fine tune its policies and procedures to stay relevant with changes in the marketplace and business objectives and plans. 5. Credit Risk The Group is exposed to credit risk inherent in its existing business operations and lending business, arising from trade receivables and loans to merchants. The Group actively monitors and manages its credit risk to keep the credit risk exposure within acceptable financial levels of the Group. The Group had in 2022 established a Group Credit Risk and Collection Policy that covers the collection process for trade receivables as well as the lending criteria and risk models leveraging on existing merchant information, prior repayment records and other indicators to assess merchant credit worthiness and assist in making credit decisions. 6. Environmental, Social & Governance (“ESG”) Sustainability Risks The Board has approved four policies specifically related to Environmental and Social aspects of the ESG Risk Management which are (1) Climate Change & Risk Policy, (2) Labour & Human Rights Policy, (3) Gender Diversity Policy and (4) Senior Management Remuneration Policy and Procedure. Further to the said four policies, the risk management principles of the Group is also to be guided by the governance perspective of ESG risk with the five (5) other main Board policies, i.e.: Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Policy, Anti-Bribery and Corruption Policy, Whistleblowing Policy and the Code of Ethics and Conduct. With all these nine (9) policies in place, Group Risk together with Group Legal, Compliance and Sustainability continues to ensure the ESG risks as enshrined in the said Policy are assessed and complied accordingly. KEY INTERNAL CONTROL PROCESSES The following areas of governance contain clearly defined corporate values, code of business ethics and conduct as well as comprehensive policies and procedures to assist Management in ensuring that a sound system of internal control is maintained in the Group. 1. Authority and Responsibility a) Board Committees Board Committees are established and operate under clearly defined Terms of Reference (“TOR”) to provide oversight function and ascertain the adequacy of the internal control framework in the Group. TOR is reviewed periodically to objectively and independently focus on certain responsibilities delegated by the Board. b) Delegation of Authority The Delegation of Authority clearly defines the authority and authorisation limits of the Management in all aspects of the Company’s key business decisions, provides guidance on the division of responsibilities, and is periodically reviewed to reflect and be in line with the growth of the business, operational and organisational environment. STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL CONT’D 63 ANNUAL REPORT 2023
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