BIMB Integrated Annual Report 2019

Managing Our Material Matters In developing our strategies, we take into consideration the importance of various factors on our business priorities that can have an impact on growth as well as risks that if well managed, become our opportunities. In carrying out our materiality assessment, we look at macro-economic conditions and changing needs of our stakeholders. This is important to facilitate the development of a strategy for our long-term value creation and sustainability. 1. Economic Environment – Ensuring Sustainable Business Operations amid Challenges Our priority is placed on creating economic value from our businesses, demonstrating resilience in earnings and delivering consistent returns to our stakeholders. We closely monitor the economic landscape as well as trends and evolution of the financial and business environment. To ensure continuous and resilient business sustainability, BHB looks towards consolidation and alignment as key elements in our business model and corporate strategy to unlock value for our shareholders. Risks Action Exposure to risk of mismatch between investment assets and financial obligations due to economic factors Takaful Malaysia • Invest in high quality Sukuk with longer terms to maturity • Regularly monitor the mismatch level as part of ongoing strategy to reduce exposure • Monitor liquidity position to ensure adequate liquidity to honour financial obligations 2. Regulatory Landscape – Aligning with Dynamic Changes in Regulations The financial sector in Malaysia operates on a highly regulated environment. As a holding company that oversees subsidiaries across banking and non-banking businesses in Malaysia, BHB places high importance on efforts to maintain a strong and stable financial sector with robust financial and operational resilience, supported by strong risk management and compliance capabilities. Risks Mitigation Action Increased diversity in regulations governing banking, Takaful and securities business such as differing capital adequacy obligations The Group • Corporate exercise for subsidiaries to come into their own as independent entities to manage their highly-specialised business in accordance to their respective regulatory environment • Corporate exercise allows for faster, relevant and empowered decision making against respective regulatory and business obligations Lack of compliance to law, rules and obligations of the banking, Takaful and securities sectors that could lead to commercial and reputational loss Bank Islam • Formation of Integrity Plan • Establishment of Gift Policy • Establishment of Anti-Bribery and Corruption Policy • Conducted comprehensive Corruption Risk Assessment to establish Corruption Risk Management Framework • Implementation of Anti-Bribery Management System • Embracing regulatory compliance by conforming to the laws, regulations, guidelines and specifications relevant to Islamic banking business processes and industry’s best practices Takaful Malaysia • Implementation of Anti-Money Laundering and Counter Financing of Terrorism Policy • Establishment of Personal Information Record and Management Framework • Implementation of Fraud Management Policy • Implementation of Whistle-Blowing Policy • Implementation of Anti-Corruption Policy • Embracing regulatory compliance by conforming to the laws, regulations, guidelines and specifications relevant to Takaful business processes and industry’s best practices 110 Integrated Annual Report 2019 Group Overview Sustaining The Group Management Discussion & Analysis Group Governance MANAGEMENT DISCUSSION & ANALYSIS REAPING RESULTS OF OUR GROWTH STRATEGY