Enterprise Risk Management
The Board of Directors and Management of Mabuhay Holdings Corporation consider risk management as an integral part of the organization’s strategic management.
The Board through the Audit Committee provides oversight over Management's activities in managing credit, market, liquidity, operational, legal and other risks of the Company. This function shall include regular receipt from Management of information on risk exposures and risk management activities.
The Board reviews the reports from management that are necessary to identify, monitor, and assess the risk exposures and capital adequacy and their implications to the Company.
The Board also reviews, approves and confirms proposals relating to risk limits, risk exposure allocation, capital allocation and other related risk management policies.
RISK POLICY
The Company’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial performance.
Management, under the direction of the Board of Directors of the Group, is responsible for the management of financial risks. Its objective is to minimize the adverse impact on the Group’s financial performance due to the unpredictability of financial markets.
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RISK EXPOSURE |
DESCRIPTION |
RISK MANAGEMENT POLICY |
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1) MARKET RISK |
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a) Foreign exchange risk |
The foreign exchange risk is the risk that the value of a financial instrument will fluctuate because of changes in foreign exchange rates.
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The Company manages its foreign exchange risk by constantly reviewing its exposure to commitments payable in foreign currency and ensuring appropriate cash balances are maintained to meet current commitments. |
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b) Price risk |
The Company’s exposure on price risk is minimal and limited only to investments classified as at fair value through profit or loss in the consolidated statement of financial position. Changes in market prices of these investments are not expected to impact significantly its financial position or results of operations. |
The Company monitors the movements of its share price on a daily basis. |
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c) Interest rate risk |
Interest rate risk refers to risk that the value of a financial instrument will fluctuate due to changes in market interest rates |
The Company borrows at fixed interest rates. its borrowings are not exposed to fair value interest rate risk as these are carried at amortized cost. |
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2) CREDIT RISK |
Credit risk is the risk that a counterparty will cause a financial loss to the Company by failing to discharge an obligation. |
The Company maintains its funds to reputable and stable banks. The Company’s exposure to credit risk primarily relates to cash in banks and financial receivables. |
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3) LIQUIDITY RISK |
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities. |
Due to the dynamic nature of the underlying businesses, the Company aims to maintain flexibility in funding through advances from related parties, extending payment terms for due to related parties, and an efficient collection of its notes receivables from third parties. The Company regularly evaluates other financing instruments to broaden its range of financing resources. |