Risk Management Workshop 22 Sept 2011

RISK IMPACT IN VALUE (FINANCIAL TERMS) USING RISK PARAMETERS

Financial factor REVENUE/ TURNOVER NET ASSETS Insignificant No changes Minor < 5% decrease < 5% decrease < 5% increase Absorbed under normal operating conditions Consequences Moderate 5-10% decrease 5-10% decrease 5-10% increase Affected eg. Borrow within group Guidance Notes: Major 10 - 30% decrease 10 - 30% decrease 10 - 30% increase Adversely affected eg borrow externally Catastrophic > 30% decrease > 30% decrease > 30% increase Serious & immediate cash flow problems eg unable to borrow, resort to selling core assets > 30% decrease When using % increase or decrease, the increase/decrease should be based on budgeted figure. Where budgeted figure is not available, it can be based on any other financial basis such as previous year ended figures, or previous month's balances (e.g. debtors), etc. The basis should be stated in the risk report as a note. For Cash Flow, quantification of the cash flow risk should be made such as what is the shortfall in cash flow, for how long, how is this need to be funded, etc. These tables of Risk Impact in Financial and Non Financial terms are merely suggestions to guide you in assessing the impact of the identified risks. For your risk reporting.They are not necessary the standard to be used for all companies in PJD Group due to the different businesses, size of operations, profitability, capital structure, etc. of each company or business division.

No changes

EXPENSES

No changes

CASH FLOW

No changes

PROFIT

Little or no impact

< 5% decrease

5- 10% decrease

10 - 30% decrease

RISK IMPACT IN NON FINANCIAL VALUE USING RISK PARAMETERS

Non Financial Factor REGULATORY eg Bursa, DOE, IRB, EPF, HDA, STA, BCP(M&M)A, Copyrights, etc Insignificant Minor breaches by individual employees Minor No fine - no disruption to scheduled services or operations Consequences Moderate Fine but no disruption to scheduled services or operations Major Fine and disruption to scheduled services or operations Catastrophic Significant disruption to scheduled services or operations over an extended period of time Depression

Macroeconomic Environment

Continuing Slow growth in growth in the certain sectors economic environment Minimal impact on reputation with letters to local/ industry press On-site environmental exposure immediately contained Series of articles/ complaints in local/industry press leading to potential impact on reputation

Slowdown in the general economy (no growth) Reputation will be affected in the short term with complaints to minister/local govt & stakeholders On-site environmental exposure contained with outside assist'ce

Economic recession

Reputation/ Credibility

Serious with potential for permanent diminution in reputation with adverse publicity Off-site environmental exposure contained with outside assist'ce

Serious longer term reputation impairment with extensive -ve nationwide coverage

Environment

On-site environmental exposure contained after prolonged effort

Environmental exposure off-site with detrimental effects

Risk Management Workshop 22 Sept 2011

RISK LIKELIHOOD DESCRIPTION Degree Almost Certain Description Event is expected to occur in most circumstances Event will probably occur in most circumstances Event should occur at some time Probability Frequency >90% Monthly

Likely

50-90%

Once a year Once in 2 years Once in 3 years Once more than 3 years

Moderate

30-50%

Unlikely

Event could occur at some time

10-30%

Rare

Event may occur only in exceptional circumstances

<10%

Notes: a) Likelihood should be ascertained based on past historical data whenever possible. b) A record of the incidents of the risk occuring should be established. This should be recorded in the risk register. E.g. Risk of Flooding affecting business of hotel in Kuantan 11 Jan 1994 - heavy rain causing flood in widespread area in Kuantan affecting business.Period : 8 to 11 Jan 1994 26 Dec 1998 - heavy monsoon for past 2 weeks causing severe flood in Kuantan town and Balok Beach area. Damaged to beach and hotel facilities for outdoor activities. c) Each event which gave rise to the risk does not follow the same probability or frequency. Therefore, when using frequency as the basis, the number of times the risk is expected to happen should be indicated clearly. d) The above are merely guidance notes and other basis could also be used to determine the Likelihood of the identified risk. This is due to the different businesses in PJD Group where different performance requirements are set for each business division depending on their assets employed, capital requirements, size of operations, etc.

Risk Management Workshop 22 Sept 2011

TABLE 2 - RISK PROFILE TABLE

RISK PROFILE TABLE The table below sets out the key risks faced by a Business Division Residual Risk Score 13 19 18 18 13 13 13 13 22 12 Risk Level Significant(S) High(H) High(H) High(H) Significant(S) Significant(S) Significant(S) Significant(S) High(S) Moderate(M)

Risk 1 2 3 4 5 6 7 8 9 10 Change in Government Policy Competition Risk Risk of dependency on Key staff Supply risk Regulatory risks Risk of bad debts Ineffective Cost management Change in technology Fire & other disruptions Breakdown of Information systems & secuirty breaches

Likelihood Moderate(L3) Likely(L4) Moderate (L3) Moderate (L3) Moderate (L3) Moderate (L3) Moderate (L3) Moderate(L3) Unlikely (L2) Unlikely (L2)

Impact Moderate(I3) Major (I4) Major (I4) Major (I4) Moderate (I3) Moderate (I3) Moderate (I3) Moderate (I3) Catastrophic(15) Moderate (I3)

When submitting to Risk Management Committee, only risk assessed to be SIGNIFICANT or HIGH need to be submitted.This means only the risks numbered from 1 to 9 will be submitted. The risk profile should be submitted in 2 formats: 1 A listing of all SIGNIFICANT and HIGH risks identified, evaluated and assessed as in the above table (Table 2). 2 A Residual Risk Profile Map as shown in Table 1

Risk Management Workshop 22 Sept 2011

TABLE 1 - RISK PROFILE MAP

RESIDUAL RISK PROFILE MAP RISKS

R9

CATASTROPHIC MAJOR

O4 R5

O3 F7 O8

B2

IMPACT MODERATE

B1
F6

B1 B2 O3 O4 R5 F6 F7 O8 R9

Change in Government Policy Competition Risk Risk of dependency on Key staff Supply risk Regulatory risks Risk of bad debts Ineffective Cost management Change in technology Fire & other disruptions LEGEND Strategic/Business risk Financial risk Operational risk Other risk

MINOR B F O R RARE UNLIKELY MODERATE LIKELIHOOD ALMOST LIKELY CERTAIN

INSIGNIFICANT