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The 1997 Asian financial crisis exposed many weaknesses in the region and spurred multiple reforms, including a drive to improve corporate governance.[1] Malaysia introduced its first corporate governance code in 2000 and revised it in 2007. In 2011, its Securities Commission established a "Blueprint" to achieve excellence in corporate governance, and in 2012 delivered a new "comply or explain" code.[2] According to its risk management guidance, the board of directors should:

• Establish a sound framework to manage risks.

• Understand the principal risks of all aspects of the company's business.

• Recognize that business decisions involve the taking of appropriate risks.

• Achieve a proper balance between risks incurred and potential returns to shareholders.

• Ensure that there are systems in place that effectively monitor and manage these risks.

• Determine the company's level of risk tolerance and actively identify, assess, and monitor key business risks to safeguard shareholders' investments and the company's assets.

• Disclose in the annual report the main features of the company's risk management framework and internal controls system.

According to the 2013 ASEAN Corporate Governance Scorecard published jointly by the ASEAN Capital Markets Forum and the Asian Development Bank,[3] the performance of Malaysia's Top 100 companies (PLCs) in terms of conformity to recommended corporate governance principles and practices "is commendable and at the same time presents opportunities for more improvement." Among the areas for improvement identified by the report was the "lack of disclosure of key risks (other than financial risks)."

  • [1] Ibid.; Corporate Governance on Asia, Asian Roundtable on Corporate Governance, OECD, 2011.
  • [2] Malaysian Code on Corporate Governance 2012, Securities Commission Malaysia, March 2012.
  • [3] "ASEAN Corporate Governance Scorecard, Country Reports and Assessments 2012- 2013," Joint Initiative of the ASEAN Capital Markets Forum and the Asian Development Bank, Asian Development Bank, 2013.
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