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Tenaga Nasional Berhad 152 Annual Report 2009Statement ofInternal ControlBOARD RESPONSIBILITYThe Board of Directors (Board) is responsible forTenaga Nasional Berhad’s Group (the Group)system of internal control. The system is designedto meet the Group’s business objectives,safeguard shareholders’ investments, the interestof customers, regulators and employees, and theGroup’s assets. The internal control systemcovers the areas of risk management, finance,operations, management information systemsand compliance with the relevant laws andregulations. The system provides a reasonablebut not an absolute assurance against materialmisstatement, loss or fraud.The Board has established a framework foridentifying, evaluating and managing thesignificant risks faced by the Group. Theframework and risk management processes arereviewed at regular intervals by the Board and isin accordance with the Statement on Internalcontrol: Guidance for Directors of Public ListedCompanies.RISK MANAGEMENTAn Enterprise Wide Risk Management (EWRM)System has been approved by the Board andimplemented by the Group to identify, assess,treat, report and monitor strategic and operationalrisks faced by the Group. The Board AuditCommittee (BAC) reviews the effectiveness ofthe system and the reports arising from riskmanagement activities undertaken during theyear. The BAC is assisted by the Group RiskManagement Committee, Chief Risk Officer,EWRM Department and operations staff in therisk management processes. Review of theEWRM systems is undertaken by Group InternalAudit on the operating entities to provideassurance on the adequacy and effectiveness ofthe system in mitigating and controlling the risksfaced by the Group. The processes in placeenable the system to be refined and enhanced tomeet the challenges and needs of the Group.During the year, the following initiatives wereundertaken to enhance risk managementprocesses in the Group:• Revision of an earlier EWRM TrainingModule to help staff enhance theirunderstanding of risk management roles andresponsibilities, and ability to identify,assess, treat and monitor risks within theirscope of work.• Development and implementation of TNB’sConfidentiality Policy.• Formulation of a process to identify EarlyWarning Indicators (Key Risk Indicators) forHigh Risk Areas to mitigate their potentialimpact.• Provision of risk advisory services forOperating and Project Risk Assessments byEWRM Department.• Performance of a Fraud and Ethics Review,comprising a Fraud and Ethics Survey, FraudData Analysis and review of the system formanaging fraud.• Assignment of the strategic risk assessment,monitoring, reporting and managementfunctions to the Strategic Planning Departmentwhilst retaining the operational riskmanagement functions with the EnterpriseWide Risk Management Department.CONTROL STRUCTURESThe Board has established control structures andis committed to evaluate, enhance and maintainthem to ensure effective strategic and operationalcontrol over the Group’s business operations. Thefollowing key internal control structures are inplace to assist the Board to maintain a propercontrol environment:Board and Management CommitteesIn its efforts to promote corporate governance,transparency and accountability, the Board hasset up Board and Management Committees toassist them to accomplish the vision, mission,strategies and objectives set for the Group. TheCommittees oversee the areas assigned to themunder their Terms of Reference. The Committeesplay an important role to direct, monitor andensure that the plans and operations are inaccordance with the Group’s approved long termand short term business plans, and the policiesof the Group. The Committees are:Board Committees• Audit Committee• Tender Committee• Disciplinary Committee• Nomination & Remuneration Committee• Finance & Investment CommitteeManagement Committees• Group Executive Council Committee• Group Executive Management Committee• Energy Supply Committee• Tender Committees• Group Risk Management Committee• Fuel Procurement Executive Committee