annual report - Tenaga Nasional Berhad

Enterprise Wide Risk ManagementTNB recognises that effective risk management is the key elementin the Company’s overall strategy with a focus on the on-goingimplementation of an Enterprise-Wide Risk Management (EWRM)framework to ensure that the major areas of risks are managed andcontrolled effectively.The EWRM framework ensures a uniform application of riskmanagement across the Group through standardised risk managementprocesses and Group-wide exchange of risk information.1.Overview[ Tenaga Nasional Berhad ] [ Annual Report 2008 ]2.Tenaga Nasional Berhad (TNB) recognises that the management of principalrisks plays an important and integral part of the Group’s daily operationsand the effective identification and management of such risks will positivelyaffect the achievement of the Group’s business and strategic objectives. Theon-going implementation of an Enterprise-Wide Risk Management (EWRM)framework which was introduced since 2003 would ensure that the major areasof risks are identified, managed and controlled or mitigated effectively.The EWRM framework provides for a uniform application of risk managementacross the Group through standardised risk management processes andGroupwide exchange of risk information. As a result, the Management is ableto make conscious and informed decisions by formulating and implementingnecessary action plans and monitoring the results. As the EWRM frameworkis able to prioritise operational reviews throughout the Group, it also enablesthe development of an effective internal audit plan in the risk managementprocess. Consequently management and audit resources can also be directedto high-risk areas on an informed basis.Enterprise Wide Risk Management FrameworkThe TNB EWRM framework provides for a complete risk management cycleincorporating the assessment, reporting, treatment, monitoring and review ofthe business risks within the Group. Please see Figure 12.1 Risk Management PolicyThe TNB EWRM Policy formulatedin 2004 was reviewed during theyear to enhance the effectivenessof the framework. The secondedition was published in October2007. Further improvements weresubsequently made in the followingareas:– Streamlining of the roles andresponsibilities of the GroupRisk Management WorkingCommittee (GRMWC) to providefocus on the management ofoperational risks;– D e f i n i n g t h e r o l e s a n dresponsibilities of the RiskManager, Risk Coordinator andRisk Owner; and– Effecting changes to the EWRMreporting structure138