KENANGA ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 31 December 2018 266 KENANGA INVESTMENT BANK BERHAD 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 and the Bank actively manage their 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 and the Bank maintain 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 and the Bank maintain 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 and the Bank maintain a statutory deposit with BNM equal to 3.5% of its eligible liabilities.