1. DEFINITIONS AND INTERPRETATION
1.1) In this Terms of Reference, where the context so admits the following expressions shall have the following meanings:
|“Board”||The Board of Directors of Sapura Energy Berhad;|
|“BRMC”||Board Risk Management Committee;|
|“Company Secretary”||Company Secretary of Sapura Energy Berhad;|
|“Sapura Energy” or “Company”||Sapura Energy Berhad;|
|“Independent Director”||A director as defined in Chapter 1 of the Listing Requirements;|
|Listing Requirements”||The Main Market Listing Requirements of Bursa Malaysia Securities Berhad, including any amendments made from time to time;|
|“Member”||A member of the BRMC as appointed pursuant to this Terms of Reference;|
|“Secretary”||Secretary of the BRMC;|
|“Terms of Reference”||The terms of reference of the BRMC.|
|“HSE Risk”||Combination of the likelihood of an occurrence of a hazardous event or exposure(s) and the severity of injury or ill health or environmental impact.|
1.2) In this Terms of Reference, unless the context otherwise requires:
1.2.1) words importing the masculine gender shall include the feminine, neuter genders and vice versa; and
1.2.2) words importing the singular shall include the plural and vice versa.
The principal objective of the Board Risk Management Committee (“BRMC”) is to assist the Board of Directors (the “Board”) in discharging its roles and responsibilities. The Board strives to ensure that the principles of the Malaysian Code on Corporate Governance 2012 are adhered to by the Group in all aspects of its business dealings displaying integrity and transparency with the objective to safeguard the investments of shareholders and ultimately enhancing shareholder value.
3. COMPOSITION AND SIZE
The Board shall elect the BRMC members from amongst themselves, comprising of not fewer than three (3) members with a majority of them being non-executive directors.
The Chairman of the BRMC shall be elected by the members of the BRMC from amongst the BRMC members. The Chairman shall be an independent director. Should the Chairman be absent from any meeting, one of the members who shall be an independent director shall be elected as Chairman by the BRMC member.
All members of the BRMC, including the Chairman, shall only hold office so long as they serve as Directors of the Company.
The Company Secretary or other appropriate senior officer of SEB shall act as the Secretary of the BRMC and shall be responsible, with the advice of the Chairman, for drawing up the agenda and circulating it together with all relevant documents to all members of the BRMC at least three working days prior to the meeting. Consent from all members of the BRMC shall be obtained for any meetings of BRMC called shorter than the notice period.
The BRMC may meet together for the despatch of business, adjourn and otherwise regulate the meetings quarterly or more frequent as deemed necessary. The Chairman of the BRMC or any other members of the BRMC may call for additional meetings at any time by giving at least three (3) working days prior notice unless consent for shorter notice is obtained from all members.
The quorum for all meetings of the BRMC shall not be less than two (2) members.
The BRMC may regulate its own procedure, in particular the conduct of the BRMC meetings, including attendance at a meeting by being present in person or by participating in the meeting by means of video or teleconference.
Members of the BRMC who participate in a meeting of the BRMC by means of a teleconference or any communication equipment shall be deemed to be present in person at the meeting and shall be entitled to vote and be counted in a quorum accordingly.
The BRMC shall record its deliberations, in terms of the issues discussed, and the conclusions in discharging its duties and responsibilities, with the minutes kept and distributed to each member of the BRMC and of the Board. The Chairman of the BRMC shall provide the Board with a report of the BRMC meetings, at the next Board meeting after the conclusion of each BRMC meeting. The books containing minutes of proceedings of any meetings of the BRMC shall be kept by the Company at the registered office of the Company and shall be opened for inspection to any member of the BRMC or the Board.
7. CIRCULAR RESOLUTION
A circular resolution in writing (if only deemed necessary by Chairman of the BRMC) shall be valid and effectual if it is approved and signed by a majority of members of the BRMC as if it had been passed at a meeting of the BRMC. All such resolutions shall be described as “Board of Risk Management Committee Members Circular Resolution/(s)”.
Any discussion, including any concern raised and the rationale for the decisions so made, in the resolution, shall be tabled at the BRMC meeting taking place immediately after the passing of the resolution, for notation.
Any such resolution may consist of several documents in like form, each signed by one or more BRMC members.
8. RIGHTS AND AUTHORITIES
In carrying out its duties and responsibilities, the BRMC shall:
a) have explicit authority to investigate any matter within its terms of reference;
b) have the resources which it needs to perform its duties;
c) have full, free and unrestricted access to any information, records, properties and personnel of the Group which it requires in the course of performing its duties;
d) be able to obtain independent professional or other advise in the performance of its duties at the cost of the Company; and
e) be able to invite outsiders with relevant experience to attend its meetings if necessary;
9. DUTIES AND RESPONSIBILITIES
The Board assumes the ultimate responsibility over the effectiveness of the Group’s Risk Management and HSE practices by delegating the BRMC to oversee the assessment of processes relating to the Company’s risk and controls. The BRMC shall determine that Management has implemented policies in ensuring that the Group’s risk are identified and evaluated and that the control measures which are in place are adequate and properly functioning in addressing the risks.
During the risk assessment process, the following shall be considered:
- the principal risks and the process of identification, evaluation and management of the principal risks;
- the effectiveness of internal control systems deployed by Management to address those risks;
- corrective and mitigation measures undertaken to remedy failures and/or weaknesses;
- further requirements for extensive monitoring;
- ability of the Group to meet changes in significant risks and respond to constant changes to the business and/or external environment;
- scope and quality of Management’s on-going risks monitoring and the work of internal audit and other assurance service providers on the robustness of the risk management process;
- communication and monitoring of risk assessment results to the Board; and
- actual and potential impact of any failure/ weakness, particularly those related to financial performance/ conditions affecting the Group.
The BRMC’s role in the oversight of risk management and review of the adequacy and integrity of the Group’s control environment includes:
- submission of periodical divisional risk updates to the Board;
- providing the necessary information required to support the rating of each risk identified;
- upholding a culture that emphasises integrity;
- embedding a holistic risk management framework in all aspects of the Group’s activities;
- applying the Board’s acceptable “risk appetite”, i.e. the extent of risk the Board is prepared to accept in achieving the Company’s objective;
- evaluating the principal risks and ensuring these risks are appropriately communicated to Management;
- establishing, the risk management and risk mitigating strategies for the business in general;
- conceiving and adopting a befitting scheme of delegation of Board responsibilities to committees;
- ensuring timely and regular receipt of reports from Management on principal risks and that appropriate follow-up measures are implemented on timely basis;
- adopting risk management as part of the Board’s own decision-making culture; and
- conducting quarterly review of HSE performance and risk issues raised by business divisions and monitoring progress of action plans implemented especially that of high probability or significant impact to business divisions and the Group.
- Ensuring on compliance with applicable laws, standards and any other HSE requirements that are legally binding
- Emphasising the need on conducting HSE due diligence in business decisions
- Ensuring mechanisms are in place to enable Board of joint ventures not under the Group operational control, to formally monitor and assess HSE policy implementation and HSE performance in line with the Group HSE MS.
- Influencing internal and external views on HSE.
The BRMC shall remain focused on the Group’s principal risks and ensure the implementation of appropriate systems to identify and manage these risks that threaten the business. Whilst these risks may be strategic in nature, the BRMC shall ensure appropriate controls, encompassing those that are of operational and compliance in nature, are in place and working as intended.
Care shall be exercised in the implementation of control measures. Unless it is deemed necessary, the implementation shall not require Board’s involvement but rather the Board shall be the navigator while the implementation process is to be handled by the Management.
10. MANAGEMENT ENDORSEMENT
The Head of Division and Group Chief Risk Officer shall be required to endorse the risk registers prior to submission to the BRMC. This promotes the philosophy that it is the people who work in the area who should be involved in the planning, implementing and monitoring the controls in their areas of responsibility.
11. COMPLIANCE REVIEW
The effectiveness of the controls may be reviewed by designated independent officers such as Risk Officers, HSE officers or Internal Auditors.
12. REVIEW OF THE BRMC
The Board shall review the term of office and performance of BRMC and each of its members at least once every three (3) years to determine whether the BRMC and the members have carried out their duties in accordance with their terms of reference.
13. AMENDMENTS TO THE TERMS OF REFERENCE
Any amendment to the Terms of Reference of the BRMC, as proposed by the BRMC or any other third party, shall first be presented to the Board for approval. Upon the Board’s approval, the said amendment shall form part of the Terms of reference of the BRMC, of which shall be considered duly amended.