42. FINANCIAL RISK MANAGEMENT (CONTINUED) Overview (continued) (e) Non-Financial Risk (continued) Management of non-financial risk The Group’s NFR management is premised on the Three Lines of Defence concept: • 1st line of defence – The risk-taking units i.e. Business or Support Unit (BU/SU) is accountable for the day-to-day management of non-financial risks within their business operations. To reinforce accountability and ownership of risk within the first line of defence, each risk-taking unit appoints a Risk Controller or has an embedded Risk and Compliance Unit to drive the risk culture and effective oversight of NFR within the BU/SU. • 2nd line of defence – Independent risk management and compliance functions (including shariah-related functions) are responsible for establishing the Group’s NFR Frameworks, development and implementation of NFR tools and methodologies to identify, assess, control, mitigate and monitor NFR. • 3rd line of defence – the Group Internal Audit provides independent assurance on the adequacy and overall effectiveness of the NFR management processes and internal controls. (f) Offsetting Financial Assets and Financial Liabilities The Group and the Bank report financial assets and financial liabilities on a net basis on the balance sheet only if there is a legally enforceable right to set off the recognised amounts and there is intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. The following financial assets and liabilities are subject to offsetting, enforceable master netting arrangements and similar agreements: Gross amounts of recognised financial assets in the statement of financial position RM’000 Gross amounts of recognised financial liabilities in the statement of financial position RM’000 Net amount presented in statement of financial position RM’000 Related amounts not set off in the statements of financial position Net amount RM’000 Financial instruments RM’000 Financial collateral received RM’000 2024 Derivatives assets 92,471 – 92,471 (11,018) (130) 81,323 Derivatives liabilities – 109,324 109,324 (11,018) (130) 98,176 2022 Derivatives assets 68,412 – 68,412 (42,230) (130) 26,052 Derivatives liabilities – 56,548 56,548 (42,230) (130) 14,188 Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2024 414 Notes to the Financial Statements for the financial year ended 31 December 2024
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