KENANGA INVESTMENT BANK BERHAD SUSTAINABILITY REPORT 2024 BASIS OF THIS REPORT OUR APPROACH TO SUSTAINABILITY KENANGA AT A GLANCE GOOD GOVERNANCE LEADERSHIP STATEMENTS SUSTAINABLE ECONOMIC GROWTH ENVIRONMENTAL STEWARDSHIP EMPOWERING PEOPLE AND COMMUNITIES APPENDIX 33 32 RISK MANAGEMENT Customer Risk Management The Group Credit Committee (“GCC”), which is chaired by the Chief Credit Officer (“CCO”), convenes fortnightly and is responsible for overseeing and managing credit risk by reviewing and approving credit-related decisions. Our business units conduct annual account reviews and regularly monitor activities within their clients’ accounts through an impairment trigger assessment. This assessment is designed to identify early warning signs of deteriorating creditworthiness, allowing for timely intervention. Should there be material decline in creditworthiness, the respective business units will engage with affected clients and propose action plans to mitigate the risk. To ensure more rigorous and frequent monitoring of higher-risk accounts, Kenanga has established an internal monitoring list and watchlist. In addition to tracking high-risk accounts, the Group has also compiled a list of vulnerable sectors to monitor sectoral concentration risk. 1 Credit Risk WHY IT MATTERS Risk management is becoming an essential material matter as businesses are exposed to increasingly complex and interconnected risks. These risks are operational, financial, regulatory, and sustainability-related in nature, with potentially significant impacts on business resilience and its long-term success. At Kenanga, we adopt a proactive approach to risk management, enabling us to identify, assess, and mitigate potential threats, contributing to greater organisational resilience. As regulations evolve and shareholder expectations grow, we are committed to enhancing our risk management practices to ensure our continued sustainability and success. OUR APPROACH The Group has developed a risk management framework that aligns with the guidelines and requirements of Bank Negara Malaysia, Bursa Malaysia, and the Securities Commission of Malaysia. Our framework is designed in accordance with relevant international standards and regulatory requirements. Our Board of Directors is the highest authority for reviewing and approving the Group’s risk management policies, considering the recommendations of supporting risk committees such as the Group Board Risk Committee (“GBRC”) and the Group Risk Committee (“GRC”). KEY RISKS IDENTIFIED Kenanga has incorporated key risks into its Enterprise Risk Management (“ERM”) framework, ensuring that considerations for these risks are cascaded down to the relevant risk management policies in key categories such as credit, market, operational, and climate-related risks. This was achieved through transmission mapping and impact assessments that addressed both physical and transition risks associated with climate change impacts. Managing Supply Chain Risk Effectively managing ESG risks within the supply chain promotes responsible and sustainable sourcing, reduces operational interruptions and strengthens stakeholders’ trust. By aligning sourcing strategies with environmental and social standards, we can reduce adverse impacts on communities and ecosystems, while addressing key issues such as climate change and human rights within the supply chain. Kenanga’s procurement practices are guided by the Group Procurement Policy, which was reviewed and enhanced in 2024 to ensure compliance with BNM’s Climate Risk Management and Scenario Analysis in managing climate and ESG risks across business operations and value chains. The policy outlines a framework for employees to uphold professionalism, transparency and accountability in procurement decisions. In addition, we have in place a Group Code of Conduct for Vendors, which sets out the requirements, standards and anti-corruption laws, including the Malaysian Anti-Corruption Commission Act 2009, to which vendors must adhere. As part of our due diligence effort, we conduct a ‘Know Your Vendor Assessment’ for all newly onboarded suppliers and key selected vendors at the Group level. The assessment, which includes sections on environmental management, climate change, social, and governance, helps us to uphold high standards of ethics and integrity in our business partnerships with contractors and intermediaries which include vendors, suppliers and service providers. Additionally, we conduct comprehensive corruption risk assessments, including anti-money laundering screenings as part of our procurement process while our fully digitalised procurement system enables high levels of transparency in decision-making and approvals. 3 Supply Chain Risk Climate and ESG Risk Integration Climate risks are managed through a clear governance structure, with the Board, committees, Business Units, and Risk Management all playing key roles in assessing, monitoring, and addressing these risks. Kenanga has established a lending and investment assessment process which includes ESG considerations in identifying and evaluating ESG risks in our business activities. The outcome of the assessment offers an overview of our client’s climate profile and related risks, which ensures that our lending and investment activities are governed by our risk appetite, as outlined in our Climate Change Risk Management Framework. The thresholds stated within the framework serve as a key reference for our lending and investment decisions. During onboarding or annual risk reviews, we communicate climate risk requirements and outline the remedial or mitigating actions expected to support their transition. These procedures help guide clients in taking appropriate steps to align with our risk appetite and financing criteria. 2 Sustainability and ESG Risks For more information on how we manage our Climate Risk, please refer to pages 58 to 69 of this Report. GOOD GOVERNANCE GOOD GOVERNANCE
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