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. The tone and culture towards managing key risks is carefully nurtured and directed by the Board and embedded into the Group’s processes and structure. The Risk Management Committee ensures the implementation and compliance of a robust risk management process and the relevant internal controls system. 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 misstatements or loss. The Board has received assurance from the Executive Committee (“EXCO”) and Chief Financial Officer that the Group’s risk management and internal control system is adequate and operates effectively, in all material aspects providing reasonable assurance that risks are managed within tolerable ranges. The Executive Committee consists of the Executive Chairman, Group Managing Director, Executive Directors of the Company and Heads of Business Units. RISK MANAGEMENT The Board has put in place an Enterprise Risk Management (“ERM”) Framework, applying the relevant practices set out in the Malaysian Code on Corporate Governance 2021, to ensure that there is an on-going process of identifying, evaluating, and managing risk exposure. The Group’s ERM framework enhances the Group’s ability to make better decisions, improve performance and capitalise on opportunities which are essential to achieve the Group’s vision of being a preferred global agro-based enterprise by maintaining and implementing relevant controls or translating the principal risks of the business into upside opportunities. Management is accountable to the Board for risk management and internal control and has implemented processes to identify, evaluate, monitor and report risks in a timely manner. Management promptly mitigates risk through the design and implementation of effective and relevant controls. For this, a Risk Management Committee (“RMC”) and a Risk Management Unit (“RMU”) have been established by the Group. Risk Management Committee The members of the RMC comprises a majority of Independent Non-Executive Directors appointed by the Board of Directors. The RMC is responsible for amongst others: • To create a high-level risk strategy policy aligned with the Company’s strategic business objectives; • To perform risk oversight and review risk profiles (Company and the Group) and organisational performance; and • To provide guidance to the business units’ risk appetite and capacity, and other criteria, which, when exceeded, trigger an obligation to report upward to the Board. Risk Management Unit Chaired by the Executive Chairman, the RMU comprises Heads of Business Units (“HOBU”) and undertakes the following responsibilities: • To communicate board vision, strategy, policy, responsibilities, and reporting lines to all employees across the Group; • To identify and communicate to the RMC the critical risks (present or potential) the Group faces, their changes, and the management action plans to mitigate the risks; and • To perform risk oversight and review risk profiles (Company and the Group) and organisational performance. The respective subsidiaries maintain their own risk registers. Overseen by the respective HOBU, subsidiaries perform quarterly review of their risk registers to document their risk identification, assessment and mitigation. Residual risks are being assessed for its likelihood and impact defined by the ERM Framework. Risks that are deemed significant or high at Group level are brought up to the RMU for further review and deliberation. STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL The Head of Internal Audit and Risk Management facilitates the risk management process in accordance with the ERM Framework. This facilitation is a consulting service provided to the Group without assuming any management responsibility. Risk Management Committee (RMC) Risk Management Unit (RMU) Subsidiaries/Business Entities Board of Directors (BOD) PRINCIPAL RISKS During the financial year under review, the Group’s activities were exposed to the following principal risks: Key Risks Description Key Mitigation Measures Operational Risk The Group’s policy is to assume operational risks that are manageable within its core business competencies. The operational risk management ranges from disease outbreak, power failure, depleting fish resources, food safety, halal compliance, high feed cost and environmental related risk. • Day-to-day operational risks are mainly decentralised at the respective business unit level and guided by standard operating procedures (SOPs). • Where applicable, monitoring mechanisms are established to ensure that the risks are being adequately mitigated and managed. Financial Risk The Group is exposed to various financial risks relating to foreign currency exchanges and commodity trading and pricing related risk. The Group has imports and exports in foreign currencies, hence fluctuation of the currency exchange rates may result in financial impact. In addition, volatility of commodity prices may adversely affect financial performance of the Group. • Management has low risk appetite with regards to foreign currency exchange and commodity prices and exercises utmost prudence in managing this risk. • Constant and regular monitoring of the market and available data and being guided by hedging policies. • The futures market is utilised as a hedging tool to manage the Group’s exposure to price fluctuations. Geopolitical Risk The Group’s business can be affected by geopolitical events that may disrupt supply chain, cause high inflation, escalate feed cost and affect consumers’ purchasing power. • Supply chain and markets are being diversified. Supplies are sought from various regions and market is not concentrated to ensure that the impact arising from any unwanted geopolitical event on business and operations can be mitigated. Policy & Review Information & Risk Reporting Statement on Risk Management and Internal Control QL RESOURCES BERHAD INTEGRATED ANNUAL REPORT 2023 SEC. L E A D E R S H I P & G OVERNANCE 6 107 106 PG. PG.
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