Eng - IOI Group

statementoninternalcontrolINTRODUCTIONThis Statement is made pursuant to the KLSE Listing Requirement with regard to the Group’s compliance with thePrinciples and Best Practices provisions relating to internal controls as stipulated in the Malaysian Code on CorporateGovernance (‘Code’).As a follow through from last year’s disclosure, the Board is pleased to present below a status review of the Group’sstate of internal controls.ACKNOWLEDGEMENT OF RESPONSIBILITYThe Board of Directors affirms that it is ultimately responsible for the Group’s systems on internal controls that includesthe assurance of its adequacy and integrity at all times, and its alignment with our business objectives. However, itshould be noted, that these systems are designed to manage rather than eliminate the risks of failure to achieve businessobjectives; and as such, could only provide reasonable but not absolute assurance against material misstatement or loss.NATURE OF OUR INTERNAL CONTROLSThe Board confirms that there is an on-going process for identifying, evaluating, managing and monitoring thesignificant risks that may affect the achievement of our business objectives. Our system of internal controls covers riskmanagement, and financial, organisational, business, operational, administrative and compliance controls. Theseintegrated systems are designed to manage both the internal and external environment dynamics to optimise the Group’sability to achieve its Vision and objectives through the successful execution of its strategies.• Enterprise Risk Management (‘ERM’) FrameworkInstitutionalised and rolled out since 2002, the ERM Framework provides a relational, integrated, and disciplinedapproach for the Group’s various businesses to systematically manage business risks and optimise businessopportunities in relation to common objectives in various hierarchy of the organisation. The workings of theFramework entailed risks and opportunities identification and assessment, and the resulting control activities andaction plans that address the aforementioned. Other key features of our ERM Framework includes:- Diagnostic risk measure- Guidelines on Operating Principles and Policy on risk management- Built in reporting, monitoring, and review mechanismAs a Control ToolOur internal control mechanisms – whether financial, administrative, operational, or regulatory compliance innature – are carefully balanced to optimise benefits and efficiencies. The ERM Framework helps reinforce ourdecisions in implementing best practice controls on key processes that commensurate with given risks.IOI Corporation BerhadAnnual Report 200388As a Strategic ToolBesides managing the negative connotations of uncertainty, we consciously explore and exploit the opportunities itcarries. We adopt risk management as a strategic tool in strategy formulation, investment and resource allocation,and as catalyst for process innovation and best practice initiatives.