Page 295 - Bank-Muamalat_Annual-Report-2023

ANNUAL REPORT 2023
OUR NUMBERS

47. 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 & Compliance Committee (“BRCC”) to carry out its functions.
BRCC, 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 President & Chief Executive
Officer (“PCEO”). 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.

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