BIMB Integrated Annual Report 2019

• Board Risk Committee (“BRC”) The Group BRC are kept informed by its subsidiaries of their risk management policy statement and framework including the strategies, policies, the risk tolerance levels, governance and reporting structure. At the key operating subsidiaries level, reviews and assessments were carried out on the adequacy of the risk management policies and framework in identifying, measuring, monitoring and controlling risks and the extent to which these risks are operating effectively. In addition, they would also review the adequacy of relevant policies at the subsidiaries in meeting the relevant regulatory requirements including capital plan, dividend policy, investment and financing policy, single customer limit, business continuity plan, etc. • Group Management Committee (“GMC”) The GMC was re-established on 9 January 2019 to focus on group synergy. The GMC serves as a platform to discuss strategic issues, strengthen coordination and create Group synergies in order to meet the Group’s objectives and create shareholder value. The Chief Executive Officer of BHB is the Chairman of the GMC and the members comprise the Group Managing Director or CEO of the respective key operating subsidiaries. • Group Risk Management Committee (“GRMC”) The GRMC has been established to identify and review the key risk areas of the Group. It ensures that appropriate risk management systems and internal controls are in place and functioning effectively. The GRMC is also responsible for assessing the adequacy of infrastructure, resources and systems for effective risk management, and where necessary to embark on the Group’s initiative to share facilities and mobilise resources. In addition, the GRMC reviews the risk management periodic reports presented by the key operating subsidiaries on risk exposure, risk portfolio composition and risk management activities six (6) times a year. The GRMC is chaired by the Chief Risk Officer of Bank Islam who was appointed by the CEO of BHB on 1 July 2019. Members consist of the Group Chief Financial Officer, the Chief Economist of Bank Islam and BIMB Securities as well as the Chief Risk Officer and the Chief Compliance Officer of the key operating subsidiaries. • Internal Audit The internal audit function of BHB and its subsidiaries (save for Takaful Malaysia) is carried out by the Internal Audit Division of Bank Islam. For Takaful Malaysia, the internal audit function is carried out by its own independent internal audit department. The Internal Audit assesses compliance with policies and procedures and the effectiveness of the Group’s internal control systems. The Internal Audit undertakes regular reviews of BHB and its subsidiaries’ operations and business processes. It examines and evaluates the adequacy and efficiency of financial and operating controls and highlights significant risks and non-compliance. Where applicable, the Internal Audit will provide recommendations to improve the management of risks, control and governance processes. The BAEC regularly reviews the status of rectification actions on the findings or recommendations by the internal auditors. Further details on the internal audit activities are provided in BHB’s BAEC report. Internal audit is performed on all key divisions in the Group, and provides the respective BAEC an independent assurance on the operational, financial, compliance and risk related activities within the Group. The risk-based internal audit plan is approved by the AEC of the key operating subsidiaries on annual basis. All internal audit observations are highlighted in the internal audit reports and reviewed by the BAEC. • Shariah Advisory and Shariah Audit It is a fundamental requirement for an Islamic financial institution to have its entire business practices and operations based on Shariah rules and principles. Islamic finance derives its value proposition from the application of Shariah contracts in financial transactions that provide for different risks and return profiles. Adherence to Shariah principles under such distinct contracts preserves the validity and sanctity of any Islamic financial transactions. As such, BHB is committed to upholding these principles by its strict observance of the Shariah Governance Framework outlined by Bank Negara Malaysia (“ BNM ”). The Shariah advisory function of BHB and its subsidiaries (save for Takaful Malaysia and BIMB Securities) is carried out by the Shariah Supervisory Council of Bank Islam (“ SSC ”). For Takaful Malaysia and BIMB Securities, the Shariah advisory function is carried out by its own independent Shariah committee. One of the key responsibilities of the SSC/Shariah committees is to advise its respective Boards on Shariah matters in relation to business operations and Shariah compliance, auditing the operational aspect of BHB and endorsing the zakat computation and distribution. The Shariah audit function of BHB and its subsidiaries (save for Takaful Malaysia) is carried out by the Shariah Division of Bank Islam. For Takaful Malaysia, the Shariah audit is carried out by its own independent Shariah department. The Shariah audit assesses matters relating to Islamic business operations and activities, particularly on Shariah compliance related matters based on the Shariah Compliance Policy. The principal objective is to provide an independent assessment and assurance to add value and improve the degree of compliance in relation to BHB’s Islamic business operations as well as ascertaining a risk sound and internal control for Shariah Compliance. The same methodology used in internal audit is used in carrying out the Shariah audit, which includes audit planning, substantive procedures, reporting and follow up on remedial actions. 157 BIMB HOLDINGS BERHAD 199701008362 (423858-X) Shareholders’ Information Financial Statements Additional Information Disclosure Summary