MISC BERHAD 184 INTEGRATED ANNUAL REPORT 2023 185 www.miscgroup.com GOVERNANCE SECTION 12 SUMMARY OF THE BSRC’S WORK IN 2023 Appended below is a summary of the BSRC’s work in 2023, in discharging its functions and duties: Functions Matters considered Risk Management • Reviewed the Financial Risk Appetite Setting (FRAS) FY2023 indicators for the Group. • Received quarterly updates on the FRAS indicators for the Group. • Assessed the Group’s risk status across the seven risk categories: financial; operational; governance and compliance; health, safety and security; environment; human resource; and cybersecurity, through the Enterprise Risk Management quarterly reports. • Reviewed the MISC Risk Register and assessed the primary risk events to ensure all material and strategic risks faced by the Group are managed and addressed. • Reviewed the proposals, strategies and project risk assessments relating to the proposed participation in new projects/tenders and/or other corporate exercises and provided appropriate recommendations to mitigate any identified risks. • Assessed the Group’s HSSE performance (including cybersecurity performance) through quarterly reports. • Received updates on the status of ongoing tenders and projects. • Reviewed periodic project independent review reports for major projects currently under execution. • Reviewed updates on progress of MISC’s investments and provided the necessary steer on the way forward. • Assessed, reviewed and endorsed the introduction and establishment of the MISC Group Risk Appetite for FY2024. Sustainability • Received quarterly updates on MISC’s sustainability performance in line with MISC Group Sustainability Strategy. • Received the quarterly MISC Sustainability Strategy Progress and Performance Report. • Received quarterly performance reports on ESG indicators through the MISC Sustainability Dashboard. • Reviewed the MISC Internal Carbon Pricing Framework and Responsible Supply Chain Programme. • Considered the report on the audit of MISC Sustainability Agenda. Compliance and Ethics • Conducted the annual review of the Modern Slavery Statement. • Received quarterly updates on compliance and ethics initiatives which cover policy related matters, communication and training as well as monitoring and assurance. • Received periodic updates on compliance with MISC’s Regulatory & Legislation Register as well as other compliance dashboard. Governance • Reviewed the BSRC Report, Statement on Risk Management and Internal Control, Corporate Governance Overview Statement and Corporate Governance Report for inclusion in the MISC Integrated Annual Report 2022. • Reviewed MISC Group Climate Risks and Opportunities Disclosure in the Sustainability Report 2022. DATIN NORAZAH MOHAMED RAZALI Chairperson Board Sustainability & Risk Committee Board Sustainability & Risk Committee Report Statement on Risk Management & Internal Control The Board of Directors is pleased to provide this Statement on Risk Management and Internal Control (Statement) pursuant to Paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and as guided by The Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers. The following statement outlines the nature and scope of risk management and internal controls within MISC Berhad (MISC or Company) and its subsidiaries (MISC Group or Group) during the financial year ended 31 December 2023. Accountability of the Board The Board is responsible for establishing and maintaining a sound risk management and internal control framework with the objective of safeguarding the shareholders’ interest and the Group’s assets, as manifested in the Malaysian Code on Corporate Governance 2021. The Board recognises its principal responsibility to regularly review the adequacy and effectiveness of the risk management and internal control framework. By implementing sound risk management and internal control systems, it helps the Group to achieve its performance and profitability targets whilst managing risks. In discharging its responsibilities, the Board is supported by MISC’s Board Sustainability and Risk Committee (BSRC) and Board Audit Committee (BAC) to oversee the risk management and internal control systems during the financial year ended 31 December 2023. The BSRC assists the Board in providing oversight and direction on the Group’s risk management policies, framework and process whilst the Group’s internal control framework is under the purview of the BAC. For more information on the BAC’s and BSRC’s responsibilities, please refer to their respective reports on pages 172 to 180 (for the BAC) and pages 181 to 184 (for the BSRC) of this Integrated Annual Report. During the year under review, the BSRC was further supported by the MISC Risk Management Committee (RMC), which comprises Management Committee (MC) members and Heads of Divisions, to reflect the prominence and focus by Management on the oversight of risk management for the Group. In ensuring that the Group’s internal control systems are in place and effective in dealing with risks during the year under review, the BAC was supported by the MISC Management Audit Committee (MAC), which comprises MC members and Group Internal Audit (GIA). The Board, via BSRC and BAC, periodically reviews the efficiency and effectiveness of the Group’s risk management and internal control to ensure the viability and robustness of the systems. In view of limitations inherent in any process and risks which cannot be eliminated completely, the Group has in place, a system of internal control and risk management designed to mitigate rather than eliminate the risks that may impede the Group from achieving its objectives. Therefore, it can only provide a reasonable, but not an absolute assurance against material misstatements or losses or the occurrence of unforeseeable circumstances. Thus, the Board adopts a cost-benefit approach to ensure that the expected returns outweigh the cost of risk mitigation. Risk Governance Structure The Group’s risk governance structure facilitates the flow of information and effective oversight of the implementation of risk management practices across its businesses. Risk management activities are undertaken at corporate, business/service units and subsidiaries and their risk reports are reviewed by the RMC prior to deliberation at the BSRC for subsequent approval by the Board. Each appointed and dedicated risk focal person has the responsibility for risk management activities in their units and subsidiaries to ensure consistent implementation of risk management processes across the Group.
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