Page 116 - KWAP_AR2022

114 KUMPULAN WANG PERSARAAN (DIPERBADANKAN) FoR BEttER GovERNANcE

RISK MANAGEMENT
AND COMPLIANCE

No. Risk Appetite Main Guiding Principles and Statement

4 The Board and Investment Panel state that KWAP shall only take on risks that it can assess and manage at a
reasonable level of comfort, hence such risks, in aggregate, in the normal course of business, shall not cause
the Fund material financial loss or material non-financial detriment which results in the Fund failing to meet
its strategic objectives.

5 For its investment portfolios, KWAP’s choice of asset classes, investment strategies and products are to be
guided by the following key principles:
i. A reasonably high degree of confidence in the preservation of capital value;
ii. A reasonably high degree of liquidity in the asset or portfolio of assets; and
iii. A reasonable return on investment adjusting for risks.

6 KWAP’s ability to take risks and the level of risk should consider internal capacity to manage these risks.
Where necessary and required, KWAP will source expertise from external parties. KWAP should continuously
work to boost internal capabilities and expand capacity via enhancement of skill sets, knowledge, technology
and other resources.

7 KWAP will target to align total fund level risk with that of a Reference Portfolio of 50% Malaysian Equities and
50% Malaysian Government Securities. This represents KWAP’s passive risk target.

8 KWAP will target to limit total fund level risk to that of a Reference Portfolio of 60% Malaysian Equities and
40% Malaysian Government Securities. This represents KWAP’s total risk limit (i.e. both passive and active
risks).

9 KWAP accepts that it should have no less than a 50% chance of achieving salary inflation rate on a rolling
10-year basis, and KWAP accepts that it should have no less than a 75% chance of exceeding inflation over
the same rolling period.