BIMB Integrated Annual Report 2019

48 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED) 48.4 Market risk (continued) (b) Takaful (continued) (ii) Other price risk Equity price risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from profit yield risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer or factors affecting similar financial instruments traded in the market. Takaful’s equity price risk exposure relates to financial assets whose values will fluctuate as a result of changes in market prices (excluding those investment securities held for the account of unit-linked business). Takaful’s price risk policy requires it to manage such risks by setting and monitoring objectives and constraints on investments, diversification plans, limits on investments in each country, sector, market and issuer, having regard also to such limits stipulated by BNM. Takaful and its subsidiaries comply with BNM stipulated limits during the financial year and has no significant concentration of price risk. Equity price risk sensitivity analysis The analysis below is performed for reasonably possible movements in key variables with all other variables held constant, showing the impact on OCI/Equity for Takaful Operator, and showing the impact on operating surplus and participants’ fund for Family Takaful Fund and General Takaful Fund accordingly. The correlation of variables will have a significant effect in determining the ultimate impact on price risk, but to demonstrate the impact due to changes in variables, variables had to be changed on individual basis. It should be noted that movements in these variables are non-linear. Change Impact on Impact on Impact on in profit Impact on operating participants’ variables after tax equity* surplus fund RM’000 RM’000 RM’000 RM’000 2019 Market price +15% 844 844 44,905 44,905 Market price -15% (810) (810) (44,905) (44,905) 2018 Market price +15% 2,343 2,343 39,096 39,096 Market price -15% (2,343) (2,343) (39,096) (39,096) * Impact on equity reflects adjustments for tax, when applicable. NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 (CONTINUED) 292 Integrated Annual Report 2019 Group Overview Sustaining The Group Management Discussion & Analysis Group Governance