AirAsia Group Berhad - Annual Report 2017

STATEMENT ON RISK MANAGEMENT

& INTERNAL CONTROL

Following the completion of the internal reorganisation of AirAsia Berhad (“AAB”) and the transfer of its listing status to AirAsia Group Berhad

(“AAGB”) on 16 April 2018, AAB is now a wholly-owned subsidiary of AAGB. This Statement outlines the nature and scope of the riskmanagement

and internal control activities of the group of companies of AirAsia (“the Group”) for the financial year ended 31 December 2017 (“the Financial

Year”), which will continue to be adopted by AAGB in the next financial year.

As part of their corporate governance and in line with best practices, AAGB and AAB are committed to maintaining a comprehensive and

robust risk management and internal control system. The Board of Directors (“the Board”) of AAB is guided by the requirements set out within

Paragraph 15.26 (b) of the Main Market Listing Requirements (“MMLR”) issued by Bursa Malaysia Securities Berhad as well as the Malaysian

Code on Corporate Governance 2017 (“MCCG”) released by the Securities Commission Malaysia. The following statement outlines the nature

and scope of the Group’s internal controls and risk management framework in 2017.

RESPONSIBILITIES

THE BOARD

The Board is committed to implementing and maintaining a robust risk management and internal control environment and is responsible for

the system of risk management and internal control. The Board acknowledges that the risk management and internal control systems are

designed to manage and minimise risks as it may not be possible to totally eliminate the occurrence of unforeseeable circumstances or losses.

AUDIT COMMITTEE

The Audit Committee (“AC”) evaluates the adequacy and effectiveness of the system of internal controls through a review of the results of work

performed by the Group Internal Audit Department (“GIAD”) and External Auditors and discussions with Senior Management.

The AC, established by the Board in 2004, comprises two (2) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive

Director. The AC of AAGB comprises the same members as AAB. The AC Report is disclosed on pages 193 to 196 of this Annual Report.

The duties and responsibilities of the AC are set out in its Terms of Reference, which is available on AAB’s corporate website

RISKMANAGEMENT COMMITTEE

The Board has delegated the governance of Group risk to the Risk Management Committee (“RMC”). The RMC was formally established in

November 2017 and comprises three (3) Non-Executive Directors with a majority of Independent Directors. The RMC of AAGB comprises the

same members as AAB.

Prior to the formation of the RMC, risks and mitigation plans were tabled at the AC. The RMC enables the Board to undertake and evaluate key

areas of risk exposures. The primary responsibilities of the RMC are as follows:

●

To oversee and recommend the Enterprise Risk Management (ERM) strategies, frameworks and policies of the Group.

●

To implement and maintain sound ERM frameworks which identify, assess, manages and monitors the Group’s strategic, financial,

operational and compliance risks.

●

To develop and inculcate a risk awareness and risk avoidance culture within AAB.

In fulfilling its responsibilities in risk management, the RMC is assisted by the Group Risk Department (“GRD”).

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AirAsia Group Berhad

REPORTS AND FINANCIAL STATEMENTS

197