KENANGA ANNUAL REPORT 2017

50. FINANCIAL RISK MANAGEMENT (CONT’D.) (c) Liquidity risk Liquidity risk is the risk of loss as a result of the Group’s or the Bank’s inability to meet cash flow obligations on a timely and cost effective manner. Liquidity risk is managed through the Liquidity Coverage Ratio Framework (“LCR”) issued by BNM, internal policies and management oversight by Group Risk Committee. A ‘Contingency Funding Plan (“CFP”) has formulated covering across the policies, procedures, roles and responsibilties, funding strategies and notwithstanding, the deployment of such in a liquidity event. The Group actively manages its operating cash flows and the availability of funding so as to ensure that all funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements in addition to maintaining available banking facilities, to meet any immediate operating cash flow requirements. In accordance with BNM’s Liquidity Coverage Ratio guideline, the Group maintains a portfolio of highly marketable and diverse assets which are assumed to be easily liquidated in the event of an unforeseen interruption of cash flow. In addition, the Group maintains a statutory deposit with BNM equal to 3.5% of its eligible liabilities. Kenanga Investment Bank Berhad 31 December 2017 200 notes to the financial statements