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120 KUMPULAN WANG PERSARAAN (DIPERBADANKAN) FoR BEttER GovERNANcE

RISK MANAGEMENT
AND COMPLIANCE

KWAP has emplaced, amongst others, limits, and related guidelines, for:

Credit Risk Scope Credit

Leverage Risk Concentration Risk Internal Rating
To ensure KWAP’s leverage activities Risk of loss arising from having a significant Internal credit rating scoring model
are maintained within a pre-determined position in a single asset, product or market for corporate bond, loan and unrated
acceptable risk levels based on Total KWAP exposure counterparty in case an exposure does not
level, asset class level and portfolio level have an external credit rating
Credit Value at Risk (CvaR) Credit Analysis
Circulates profit/loss of exposures over Conduct a detailed evaluation to measure
a number of simulations, the resulting the issuer’s ability to meet its debt
distribution is the credit risk profile of the obligation by maintaining credit risk
portfolio exposure within acceptable parameters

Counterparty Risk Credit Review
The risk to each party of contract that Issuer Risk Evaluation on credit proposal will be
the counterparty is not able to meet the The probability of loss resulting from the default reviewed before tabled to the management
contractual obligations or downgraded credit rating of the issuer of a and committee
security

COMPLIANCE
The compliance function in the organisation remains a very Scope of Compliance
important core function in KWAP. Failures of the compliance
function in high profile cases in Malaysia and abroad has Regulatory Compliance
highlighted the impact, both financial and reputational, of a
non-compliance. Compliance serves as an independent This covers the external regulations and
function that identifies, assesses, advises on, monitors guidelines which KWAP is bound to comply with
and reports on the compliance risk, that is, the risk of legal such as the relevant Acts of Parliament, Minister
or regulatory sanction, financial loss, or loss to reputation of Finance’s Decrees, regulations issued by
that the organisation may suffer as a result of its failure Bank Negara Malaysia, Securities Commission,
to comply with all applicable laws, regulations, codes of Bursa Malaysia and other regulatory bodies. The
conduct and standards or good practice. regulatory requirements will be embedded into
the internal processes and practices to ensure
The main objectives of compliance are to preserve KWAP’s adherence to the regulations.
reputation so that our competitive standing and reputation
are not only maintained, but also enhanced. To achieve this b Internal Compliance
objective, Compliance’s objective is to effectively measure
and manage the compliance risk of the organisation to This covers the compliance to the Frameworks,
meet the expectations of all stakeholders. Providing the Policies, Guidelines and Standard Operating
foundation to this aspiration is the Compliance Framework Procedures established by KWAP.
which was implemented in 2010 and further revised in 2022; Ownership of regulatory/internal compliance
from which the building blocks of the compliance functions lies with the Business Units as the first line of
are shaped. In managing the roll-out of Compliance defence, any potential non-compliance should
Framework, Compliance also adopts the Three Lines of be identified up front before the event, addressed
Defence Model in managing the compliance risk in KWAP. and highlighted to Compliance team.