6.

0 RISK ANALYSIS

6.1 Risk Management

In the case of FGV, the Audit Committee also takes into consideration risks
arising from the Groups businesses. Hence, the Audit Committee is also
tasked to assist the Board of Directors to identify principal risks affecting
the achievement of the Groups objectives and ensure the implementation
of appropriate systems to manage these risks (FELDA GLOBAL VENTURES
HOLDINGS BERHAD, 2016).

The scope of duties with regards to risk management includes the review
of the risk management policy and, procedures and risk management
framework for the subsequent approval and acknowledgement of the
Board. The Committee is also required to provide guidance on the overall
risk strategy, directives for implementation and ensure that the principles
and requirements of managing risk are consistently adopted throughout
the Group.

Risk Management at FGV is also supported by a dedicated Group Risk

Management committee that assesses and manages risks for the
operations of FGV Group of Companies. FGV Group operates in a number
of economic sectors and markets in which numerous risks and
uncertainties exist. While acknowledging that it is not possible to
completely eliminate such risks and uncertainties, the Group recognises
the need for effective mitigation steps to address and respond to the
changing business environment and risk profile it faces - be it economic,
political, legal and regulatory, environmental, health and safety,
commercial or issues relating to business conduct (FELDA GLOBAL
VENTURES HOLDINGS BERHAD, 2016).

6.2 Risk Management Philosophy

a) Strategic HSE Framework

Our HSE framework is in line with global best practices and provides a
robust calendar of activities - meetings, site visits, workplace inspections,
audits, training courses, investigations, events, campaigns at both head
office, regional centres and operational workplaces all year round (FELDA
GLOBAL VENTURES HOLDINGS BERHAD, 2015).

b) Escalating Safety Standards

FGVs aspires to emulate the safety standards in the oil and gas industry.
In this respect, we make every effort to comply with all statutory
requirements. Many of our subsidiary companies also have obtained the
Occupational Health and Safety Assessment Series (OHSAS) 18001:2007
certification (FELDA GLOBAL VENTURES HOLDINGS BERHAD, 2015).

c) In-House Capacity Building Programmed

FGV has 34 Safety and Health Officers (SHO) who are registered with and
have been certified competent by Department of Occupational Safety and
Health (DOSH). This is close to our target of having one safety
professional for every 500 employees (FELDA GLOBAL VENTURES
HOLDINGS BERHAD, 2015).

d) Safety Outreach Programmed

FGV is the first public sector company to implement Komuniti Sihat

Perkasa Negara (KOSPEN) to reduce the incidence of Non Communicable
Diseases such as heart problems, strokes and diabetes. The health
screening and early intervention programme involves 3,000 employees,
workers and settler families. FGV is also one of 16 companies nationwide
selected to spearhead the Ministry of Human Resources OSH-in-Schools
programme under its OSH Master Plan 2015. The programme pairs one
school and one mentor-organisation per state to introduce OSH practices
in schools as well as integrating it into their learning modules (FELDA
GLOBAL VENTURES HOLDINGS BERHAD, 2015).

e) Online Accident Monitoring

Towards realising Zero Fatality at some 250 operational premises across

Malaysia, FGV has an online accident reporting system to enable faster
data input and comprehensive monitoring of incidents at our estates,
mills, facilities and depots (FELDA GLOBAL VENTURES HOLDINGS BERHAD,
2015).

f) Safety In Emerging Technologies

In the area of green technologies, FGV is working closely with the

Department of Occupational Safety and Health to develop the National
Biogas Safety Policy and Guidelines (FELDA GLOBAL VENTURES HOLDINGS
BERHAD, 2015).

6.3 Risk Governance Structure

The following diagram outlines the risk governance structure of the Group:

Figure 6.3.1: Risk Governance Structure (FELDA GLOBAL

VENTURES HOLDINGS BERHAD, 2016)

1. Role of the Board of Directors

The Board approves risk policies, acceptable risk appetite and provides
stewardship by reviewing and acknowledging the principal risks identified
by the RMC and ensuring the implementation of an appropriate system to
manage these risks. The Board also reviews the Groups risk management
framework, processes and responsibilities and determine whether they
provide reasonable assurance that the risks are being managed within
tolerable limits. Additionally, it also reviews the adequacy and integrity of
the internal controls and management information systems to ensure
compliance with the applicable laws, rules, directives and guidelines. The
Board also considers the nature and extent to which risks are acceptable
as well as evaluates its implications to the Group (FELDA GLOBAL
VENTURES HOLDINGS BERHAD, 2016).

2. Role of the Audit Committee

The Audit Committee assists the Board in providing oversight over the
Groups management of risks that could lead to financial loss, disruption
to operations, failure to meet its mandates or damage to its reputation.
Specifically it deliberated on RMCs periodic report and risk profile to the
Board (FELDA GLOBAL VENTURES HOLDINGS BERHAD, 2016).

3. Role of the Risk Management Committee

The RMC, chaired by the MD/CEO and the Executive Director (during the
medical leave of absence of the former MD/CEO and interim period from
his resignation until the appointment of the new MD/CEO), deliberates on
organizational risks related to the achievement of the Groups mandates
and strategic objectives and decides on appropriate policies to mitigate
and manage such risks. Its members are appointed from the senior
management team and representatives from subsidiaries (FELDA GLOBAL
VENTURES HOLDINGS BERHAD, 2016).
The RMCs key role is to review the validity of the identified risks and
ensure that actions to mitigate the risks are being implemented. The
principal risks deliberated at RMC were on the management of
organizational risks which included transversal risks (specifically, people,
legal and IT risks) and other emerging operational risks facing the Group
(FELDA GLOBAL VENTURES HOLDINGS BERHAD, 2016).

The RMC is also responsible for the following activities (FELDA GLOBAL
VENTURES HOLDINGS BERHAD, 2016):

Agreeing on the procedures and reporting formats of the risk

management processes.
Reviewing the adequacy and effectiveness of the Risk Management
Framework.
Ensuring that the Board and Management receive adequate and
appropriate information for decision making and review purposes.
Communicating and providing a reference point for dissemination
and feedback on the Groups risk management policies and
procedures.
Commissioning, where required, special task force to investigate,
develop or report on special aspects of the risk management
processes of the Group.
Presenting periodic reports on risk management, i.e. any business
risks that have impacted or is likely to impact the Group and its
achievement of its objectives and strategies to the Audit Committee
and the Board.

4. Role of the Risk Management Unit

The Risk Management Unit (RMU) is chaired by the Head of

Subsidiaries/Project Director of the respective operating units or projects.
Its members include all the relevant Heads of Division and Heads of
Department. The RMUs key role is to review the validity of the identified
risks and to ensure that action plans to mitigate such risks are being
implemented (FELDA GLOBAL VENTURES HOLDINGS BERHAD, 2016).
6.4 Risk Management Process

The risk management process involves establishing the risk environment

and thereon risks identification, assessment, evaluation and treatment.
Throughout this process, there is continuous monitoring, review,
communication and consultation. The process is illustrated as follows:

Figure 6.4: Risk Management Process

6.5 Industry Risk of Sulfuric acid

6.5.1 Hazard identification

Physical Corrosive liquid

hazards
Health Hazard Acute toxicity (inhalation in vapor form), skin
corrosion or irritation, serious eyes damage or
 eye irritation, specific target organ toxicity by
single exposure (Velocity EHS, 2014).

6.5.2 Handling Sulfuric Acid Safely

When handling pure sulfuric acid in a laboratory or industrial setting, or

when using products that contain concentrated sulfuric acid, its important
to prioritize safety precautions. The following protective equipment should
be worn when using sulfuric acid (Velocity EHS, 2014):

Respirator
Long rubber gloves
Boots
Industrial apron
Chemical safety goggles
Face shield

Exposure to sulfuric acid can occur as skin/bodily contact, ingestion, or

inhalation of vapours. Each type of exposure can pose serious hazards to
your health and should be managed immediately and appropriately by a
medical professional to minimize damage and health risks.

6.5.3 Precautionary statement

Skin If sulfuric acid comes into contact with your skin, immediately
Contact flush the affected area gently with lukewarm water for at least
30 uninterrupted minutes. Seek medical attention immediately
(Velocity EHS, 2014).

Eye If sulfuric acid gets into your eyes, immediately flush the
Contact eye(s) with water for at least 30 minutes. Seek medical
attention immediately (Velocity EHS, 2014).

Ingestio If you ingest sulfuric acid, rinse your mouth immediately with
n water. Do not induce vomiting. Continually rinse your mouth
with water and seek medical attention as soon as possible
(Velocity EHS, 2014).
Inhalati If you inhale sulfuric acid aerosols, seek fresh air and medical
on attention immediately (Velocity EHS, 2014).

6.5.4 Sulfuric Acid Storage and Disposal

Sulfuric acid or products that contain concentrated sulfuric acid should be

stored in a cool, dry area away from direct sunlight and heat sources.
Sulfuric acid should not be stored indoors in large quantities, to prevent
the possible accumulation of vapours. Product containers should be
regularly examined by professional MSDS experts for signs of damage or
leaks (Velocity EHS, 2014).

6.6 Major Risk

The Analytical Risk Management framework encompasses:

Industry Risk
-an examination of macroeconomic data, industry-specific
qualitative and quantitative elements and risk drivers that may
affect the Companys operating environment. The industry sector
risk assessment is intended to be forward-looking and sustainable
throughout the normal business cycles as opposed to a snapshot of
the present situation. Nonetheless, changing conditions, new
complexities and risks which include climate change may warrant a
reassessment of the industry risk profile.

Business Risk
-focusses on (i) the Companys ability to achieve operational
success and maintain its competitive edge; and (ii) the Companys
capacity to circumvent and manage adverse developments, given
the peculiarities and vulnerabilities of its trade. These aspects
exert considerable influence on the Companys financial health.

Financial Risk
-focusses on (i) the operational profitability levels, future earning
power and sustainability; (ii) stability and adequacy of the
operational cash flow in relation to debt servicing as well as other
possible calls on cash, such as capital expenditure and working-
capital requirements; (iii) capital structure and degree of leverage;
 (iv) liquidity position; and (v) financial flexibility referring to the
Companys alternative sources of funds in the event of a distressed
scenario. The committee is set up to ensure adequate and effective
risk management policy and processes are put in place to manage
corporate risks.

6.7 Other Risk

Every business has its own risk, thus risk analysis is need when starting a
new project. The risk analyses involve industry risk, market risk, operation
risk, social and economic risk, projected risk, project life and liquidity risk.

Market risk
Limited understanding or knowledge of the local market demand
can cause a misrepresentation of the growth and size of the
market. Unrealistic market statistics results for past few years
can cause misallocation of scarce recourses. Sales are dependent
on successful outcome of market study.

Operation risk
Lack of focus on company moves from an emerging environment
to a true business mode of operations can cause the operation of
the nickel recovery may not produce as the amount predicted in
planning. The operation for producing nickel may affect by the
life of equipment, so the amount of production may decrease
over the years.

Social and economic risk

Field tests are not positive where supply by the market is not as
predicted growth. The competitors respond more rapidly than
planned, thus the supply of nickel will higher than the demand of
market, thus it will cause the prices market of nickel decreases.
Poor distribution, customer satisfaction and product features are
concerns as competitors respond to initial product launch. In
addition, the status economic condition on that time is very
important to affect the first sales of the masks on markets.
 Projected risk
Cash flow is a problem due to lack of revenues and early proof-of-
concept funding is difficult to attract. The burn rate exceeds
capital and management tends to focus on safes rather than
profits. Thus, the actual profit in sales of masks will always lower
than the profit estimated. The potential changes in market
competitions will differ in certain period, so it is difficult to predict
as the need to focus on monthly, quarterly, and annual results.

Project life
The project life is depend on growth rates, so when the existing
line of products becomes mature, the supply will proportional
with the demand, then the cycle life of nickel can be estimated.

Liquidity Risk
Liquidity risk is the risk that the Group or the Company will
encounter in meeting financial obligations due to shortage of
funds. The Group actively manages its debt maturity profile,
operating cash flows and the availability of funding so as to
ensure that all refinancing, repayment and funding needs are
met. As part of its overall prudent liquidity management, the
Group maintains sufficient levels of cash to meet its working
capital requirements.
References

FELDA GLOBAL VENTURES HOLDINGS BERHAD. (2015). FGV CORPORATE

BROCHURE. KUALA LUMPUR: FELDA GLOBAL VENTURES HOLDINGS
BERHAD.

FELDA GLOBAL VENTURES HOLDINGS BERHAD. (2016). AUDIT COMMITEE

TERMS OF REFERENCE. KUALA LUMPUR: FELDA GLOBAL VENTURES
HOLDINGS BERHAD.

FELDA GLOBAL VENTURES HOLDINGS BERHAD. (2016). BOARD

GOVERNANCE & RISK MANAGEMENT COMMITEE TERMS OF
REFERENCE. KUALA LUMPUR: FELDA GLOBAL VENTURES HOLDINGS
BERHAD.

Velocity EHS. (2014, JULY 22). MSDSonline - EH&S Compliance Made

Simple. Retrieved from MSDSonline - EH&S Compliance Made
Simple: https://www.msdsonline.com/blog/health-
safety/2014/07/22/sulfuric-acid-safety-tips-sulfuric-acid-msds-
information