Eng - IOI Group

39 FINANCIAL INSTRUMENTS cont’dPrice fluctuation risk cont’dThe net unrecognised gain/(loss) on the above commodity future contracts have been deferred until the relatedfuture transactions occur, at which time they will be included in the measurement of the transactions.The Group is also exposed to price fluctuation risk arising from changes in the market prices of its quotedinvestments. The Group does not use derivative instruments to manage this risk as these quoted investments aremainly held as long term investments.Credit riskCredit risk or risk of financial loss from the failure of customers or counterparties to discharge their financial andcontractual obligations, is managed through the application of credit approvals, credit limits, insuranceprogramme and monitoring procedures on an ongoing basis. If necessary, the Group may obtain collaterals fromcounter parties as a mean of mitigating losses in the event of default.The Group does not have any significant exposure to any individual customer or couterparty nor does it have anymajor concentration of credit risk related to any financial instruments.The maximum exposure to credit risk for the Group and for the Company were represented by the carrying amountto each financial assets; and in addition, in respect of derivatives, the notional amount as disclosed in therespective notes to financial statements.Liquidity riskThe Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as toensure all operating, investing and financing needs are met. To mitigate liquidity risk, management measures andforecasts its cash commitments, monitors and maintains a level of cash and cash equivalents deemed adequate tofinance the Group’s operation and investment activities. In addition, the Group strives to maintain availablebanking facilities at a reasonable level against its overall debt position.205IOI Corporation BerhadAnnual Report 2003