Page 60 - HRC_AR2020

58 I 2020 ANNUAL REPORT I gOvERNANCE

STATEmENT ON RISK mANAgEmENT AND

INTERNAL CONTROL

The Board of Directors (Board) of hengyuan Refining Company Berhad (Company or hRC) is
committed to maintaining a sound internal control and risk management system to ensure the
smooth running of the business. It is hRC’s aim to manage its risks and to control its business
and financial affairs economically, efficiently and effectively so as to be able to deliver profitable
business outcomes in a disciplined way, to avoid or mitigate risks that can cause loss, reputational
damage or business failure, and to enhance our resilience to external events.
The following statement outlines the nature and scope of hRC’s internal control and risk
management in 2020.

BOARD’S RESPONSIBILITY mANAgEmENT’S ROLE
The Board affirms its overall responsibility for HRC’s risk Whilst the Board assumes responsibility for HRC’s internal
management and the internal control system, and for reviewing controls and risk management, Management holds the key
the system’s adequacy and integrity. The Board recognises role in the implementation of the internal controls and risk
that this system is designed to manage, rather than eliminate, management system. Management is accountable for regularly
the risks of not achieving HRC’s objectives and adhering to assessing that the systems continue to operate efficiently
the policies. Due to the inherent limitations, the system can and effectively.
only provide reasonable and not absolute assurance against
material misstatement, fraud or loss or the occurrence of RISK mANAgEmENT
unforeseeable circumstances.
The Risk & Integrity (R&I) Department oversees the risk
The Board Audit Committee (BAC) assists and supports the management function within HRC. The objective of risk
Board’s responsibility of overseeing the suitability, objectivity management is to promote advanced awareness and define
and independence of the Company’s external auditor and boundaries for risk-taking, and to apply fit-for-purpose risk
internal audit function. The adequacy of the HRC Control responses in order for HRC to provide a reasonably sufficient,
Framework and effectiveness of the internal control system but not an absolute assurance, against material misstatements,
has been reviewed and endorsed by the BAC based on the fraud or loss. In addition, it allows HRC to operate and achieve
assurance provided by Management, the internal and external its objectives, within a managed and acceptable risk profile.
auditors. Audit issues and actions taken by Management to
address the issues tabled by the auditors during the year were Fit-for-purpose risk responses are primarily intended to:
deliberated on during the BAC meetings. • Minimise the likelihood of a risk occurring by actively
The Board Risk Management Committee (BRMC) provides managing the sources of the risk and ensuring competent
oversight and direction on risk management matters to ensure people are overseeing the risk on a regular basis; and
prudent risk management over HRC’s business and operations. • Mitigate the impact of a risk should it arise, often through
Management has conducted a systematic and comprehensive the application of some forms of alert that the risk has
evaluation of the Key Risk Areas which were deliberated materialised, followed by the initiation of a contingency or
and presented to the BRMC. The implementation of risk recovery plan to reduce the potential consequences and
controls is monitored, and the results are presented during the also future occurrences.
BRMC meetings.
HRC adopts the best practices from ISO 31000:2018 Risk
Internal control and risk-related matters which warrant the Management to manage the risks of its business and operations.
attention of the Board are recommended by the BAC and HRC has an established and structured process for the
BRMC to the Board for its deliberation and approval. identification, assessment, communication, monitoring and
continual review of risks and the effectiveness of risk mitigation
strategies and controls.