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CHAIRMAN’S DELIVERING MSM MANAGEMENT DISCUSSION GROUP FINANCIAL
STATEMENT VALUE OVERVIEW & ANALYSIS REPORT

STATEMENT ON RISk MANAGEMENT AND INTERNAL CONTROL

Risk Management Framework and Process

An effective risk management framework seeks to protect an organisation’s capital base and earnings without hindering
growth. An overview of the Group’s Risk Management Framework is depicted below:

BOARD AND BOARD COMMITTEE Fourth line of defence –
Set requirements and/or
perform independent
Key Senior Management assurance

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MANAGE OVERSEE ASSURANCE
MSM MALAYSIA HOLDINGS BERHAD Annual Report 2020
First line of defence – Second line of defence – Third line of defence –
Functions that own and Functions that oversee Internal functions that
manage Risks risks, control and provide independent
compliance assurance

Compliance,
Compliance and Risk
Subsidiaries Management External Auditors
Policies and Standard Group Governance Regulators
Operating Procedures Group Risk Group Internal Audit Other External Bodies

The Risk Management Framework: The process of risk management adopted by the Group is
illustrated below:
MSM has adopted the 4 lines of defence model as the
fundamental approach to ensure the effectiveness of risk
management.

The framework seeks to minimise risk incidents and Establish Context
maximise business outcomes by allowing us to:

• Understand the risk environment, and assess the Identify Risk
specific risks and potential exposure.
• Determine how best to deal with these risks to
manage overall potential exposure. Communicate and Consult Analyse Risk Monitor and Review
• Manage the identified risks in appropriate ways.

• Monitor and seek assurance on the effectiveness Evaluate Risk
of the management of these risks and intervene for
improvement where necessary.
• Escalate to the Management and Board on a periodic Treat Risk
basis on how significant risks are being managed,
monitored, assured and improved.