Annual Report 2020

BOARD’S RESPONSIBILITIES The Board of Directors (“The Board”) acknowledges their responsibility in maintaining a sound system of internal control covering financial and operational controls, compliance and risk management to safeguard shareholders' investments and the Group's assets. There is an on-going review process by the Board to ensure the adequacy and integrity of the risk management and internal control system in accordance with the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers. However, the Board recognises the review of the Group's system of risk management and internal controls is a concerted and continuous process, designed to manage rather than eliminate the risk of failure to achieve business objectives. As such, internal controls can only provide reasonable and not absolute assurance against material misstatement or loss. The Board has received assurance from the Executive Committee that the Group’s risk management and internal control system is adequate and operates effectively, in all material aspects. The Executive Committee consists of the Executive Chairman, Group Managing Director, Executive Directors and Heads of Business Units. RISK MANAGEMENT The Board has put in place an Enterprise Risk Management (“ERM”) framework, in accordance with the Malaysian Code on Corporate Governance 2017, to ensure that there is an on-going process of identifying, evaluating, and managing significant business risk exposure. The Group’s ERM framework aims to facilitate the execution of strategic business action to achieve the Group’s vision of being a preferred global agro-based enterprise, by implementing relevant controls or translating the principal risks of the business into upside opportunities. The Group’s ERM framework is based on the internationally recognised COSO (Committee of Sponsoring Organizations). Risk factors are incorporated into the risk register and individually rated as High, Significant, Moderate or Low risk. The rating process is guided by a matrix of ‘possibility of likelihoods’ and the associated ‘consequences’, of which both financial and non-financial consequences are duly considered. Thereafter, owners of these risk factors will drive the implementation of risk mitigation measures towards achieving a residual risk that is within the acceptable tolerance. Management is accountable to the Board for risk management and internal control and has implemented processes to identify, evaluate, monitor and report risks and to design and implement relevant controls in response to the risks. For this, a Risk Management Unit (“RMU”) and a Risk Management Committee (“RMC”) have been established by the Group. Annual Report | 2020 QL Resources Berhad 86 Statement on Risk Management and Internal Control