Annual Report 2012 - IOI Group

STATEMENT ONINTERNAL CONTROLINTRODUCTIONThis statement is in line with the Main Market Listing Requirementsof Bursa Malaysia Securities Berhad on the Group’s compliancewith the Principles and Best Practices relating to internal control asstipulated in the Malaysian Code on Corporate Governance.ACKNOWLEDGEMENT OFRESPONSIBILITIESThe Board of Directors affirms that it is ultimately responsible forthe Group’s system of internal control, including the assurance ofits adequacy and integrity, and its alignment with businessobjectives. However, it should be noted that control systems aredesigned to manage rather than to totally eliminate associatedrisks; and as such, can only provide reasonable but not absoluteassurance against material loss or failure.RISK MANAGEMENT FRAMEWORKThe Group adopts an Enterprise Risk Management (“ERM”)framework which was formalised in 2002 and is consistent withthe Committee of Sponsoring Organisations of the TreadwayCommission (COSO)’s ERM framework, the Institute of InternalAuditors Malaysia’s Internal Control Guidance, and Bursa Malaysia’sCorporate Governance Guide. The ERM framework essentially linksthe Group’s objectives and goals (that are aligned to its Vision) toprincipal risks; and the principal risks to controls and opportunitiesthat are translated to actions and programs. The framework alsooutlines the Group’s approach to its risk management policies:i) Embrace risks that offer opportunities for superior returnsBy linking risks to capital, the Group establishes risk-adjustedreturnthresholds and targets that commensurate withvarying risk levels assumed by its businesses. Superior riskmanagement and other corporate governance practices arealso promoted as contributing factors to lowering long-termcost of funds and boosting economic returns through anoptimal balance between control costs and benefits.ORGANISATIONHIERARCHYBOARD(Exec Mgmt)BUSINESSOBJECTIVESHIERARCHYVISIONEXTERNALRISKSFRAME OFREFERENCEALIGNEDDivisions & SBU(Snr Mgmt & Mid-Mgmt)StrategicObjectives & GoalsOperation/Functions(Executives & Staff)OperationalGoals & TargetINTERNALRISKS94IOI CORPORATION BERHADAnnual Report 2012