Page 283 - Full Book_24.4.2021

NOTES TO THE
FINANCIAL STATEMENTS in retrospect

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for the financial year ended 31 december 2020 (continUed)
the Will to Suceed

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49 FINANCIAL RISk MANAGEMENT POLICIES (CONTINUED)
49.2 Financial risk management
the Group has exposure to the following risks from its use of financial instruments: achieving a leading repute
• Credit risk
• Market risk |
• Liquidity risk
• Operational risk
the Group’s exposures to the above risks are mainly attributed to its main operating subsidiaries, bank islam malaysia
berhad (“the bank” or “bank islam”) and Syarikat takaful malaysia Keluarga berhad (“takaful malaysia”). the company’s Paving the Way for a Sustainable future
exposure to these risks is not presented separately as it is not material to the Group.
49.3 Credit risk

credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet
its contractual obligations. the Group’s exposure to credit risk arises principally from its financing, advances and others
and investment securities. the company’s exposure to credit risk arises principally from investment securities.
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(a) Banking
bank islam’s credit risk is the risk of a customer or counterparty failing to perform its obligations. it arises from
all transactions that could lead to actual, contingent or potential claims against any party, customer or obligor.
the types of credit risks that the bank considers to be material includes: default risk, counterparty risk, credit
concentration risk, residual/credit mitigation risk and migration risk.

Credit risk governance adhering to the best Governance Practices
the management of credit risk is principally carried out by using sets of policies and guidelines approved by bank
islam’s management risk control committee (“mrcc”) and/or board risk committee (“brc”), guided by the
bank islam’s board of directors’ approved risk appetite Statement.
the bank has instituted two (2) levels of financing committees, which assess and approve credits at their specified |
authority levels.
the bank’s mrcc is responsible under the authority delegated by the bank’s brc for managing credit risk at
strategic level. the bank’s mrcc reviews the bank’s credit risk policies and guidelines, aligns credit risk management
with business strategies and planning, reviews credit profile of the credit portfolios and recommends necessary Laying the Foundation for Financial Growth
actions to ensure that the credit risk remains within established risk tolerance levels.
the bank’s credit risk management governance includes the establishment of detailed credit risk policies, guidelines
and procedures which documents the bank’s financing standards, discretionary powers for financing approval,
credit risk ratings methodologies and models, acceptable collaterals and valuation, and the review, rehabilitation
and restructuring of problematic and delinquent financing. |
additional information & disclosure Summary

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24 th aGm information