Page 282 - Bank-Muamalat-AR2020

280 BANK MUAMALAT MALAYSIA BERHAD About Us Our Leadership Our Strategy
ANNUAL REPORT FY2020

Notes to the fiNaNcial statemeNts
31 December 2020 (16 JamaDil awal 1442h)

46. FINANCIAL rISk MANAGEMENT OBJECTIvES AND POLICIES
Overview

The integrated risk management system enables the Group and the Bank to achieve a single view of risks across its various
business operations and in order to gain strategic competitive advantage from its capabilities. It can be described as the
strategy and technique of managing risks by taking a holistic approach towards risk management process, which includes risk
identification, measurement and management. It also aims at integrating the control and optimisation of the principal risk areas
of Market Risk (“MR”), Asset and Liability Management (“ALM”), Credit Risk (“CR”), Operational Risk (“OR”) and Shariah
Compliance Risk; and building the requisite risk management organisation, infrastructure, process and technology with the
objective of advancing the Group and the Bank towards value protection and creation.
Generally, the objectives of the Group’s and the Bank’s integrated risk management system include the following:

• Identifying all the risks exposures and their impact;
• Establishment of sound policies and procedures in line with the Group’s and Bank’s strategy, lines of business and nature
of operations;

• Set out an enterprise-wide organisation structure and defining the appropriate roles and responsibilities; and
• Instill the risk culture within the Group and the Bank.

risk governance
A stable enterprise-level organisation structure for risk management is necessary to ensure a uniform view of risks across the
Group and the Bank and form strong risk governance.
The Board of Directors has the overall responsibility for understanding the risks undertaken by the Group and the Bank and
ensuring that these risks are properly managed. While the Board of Directors is ultimately responsible for risk management of
the Group and the Bank, it has entrusted the Board Risk Management Committee (“BRMC”) to carry out its functions. BRMC,
which is chaired by an independent director of the Board, oversees the overall management of risks.

The execution of the Board’s risk strategies and policies is the responsibility of the Group’s and the Bank’s Management and
the conduct of these functions are being exercised under a management committee structure, namely, the Executive Risk
Management Committee (“ERMC”), which is chaired by the Chief Executive Officer (“CEO”). The Committee focuses on the
overall business strategies and day-to-day business operations of the Group and the Bank in respect of risk management.
In addition, as an Islamic Bank, a Shariah Committee (“SC”) is set up as an independent external body to decide on Shariah
issues and simultaneously to assist towards risk mitigation and compliance with the Shariah principles.