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ANNUAL REPORT
2016
N
otes To The Consolidated Financial Statements
AL MAZAYA HOLDING K.S.C.P. AND ITS SUBSIDIARIES
As At 31 December 2016
30. RISK MANAGEMENT
Introduction
Risk is inherent in the Group’s activities but it is managed through a process of ongoing identification, measurement
and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Group’s
continuing profitability.
Risk management structure
The Board of Directors of the Parent Company is ultimately responsible for the overall risk management approach
and for approving the risk strategies and principles.
The major risks to which the Group is exposed in conducting its business and operations, and the means and
organisational structure it employs in seeking to manage them strategically in building shareholder value are
outlined below.
Excessive risk concentration
Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in
the same geographic region, or have similar economic features that would cause their ability to meet contractual
obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate
the relative sensitivity of the Group’s performance to developments affecting a particular industry or geographical
location.
In order to avoid excessive concentrations of risk, the Group’s policies and procedures include specific guidelines
to focus on country and counter party limits and maintaining a diversified portfolio. Identified concentrations of
credit risks are controlled and managed accordingly.
30.1 Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the
other party to incur a financial loss. The Group manages credit risk by setting limits for individual counter-parties,
monitors credit exposures, and continually assesses the creditworthiness of counterparties, with the result that the
Group’s exposure to bad debts is not significant.
The Group trades only with recognised creditworthy third parties. In addition, receivable balances are monitored
on an ongoing basis. For transactions that do not occur in the country of the relevant operating unit, the Group
does not offer credit terms without the approval of the Group management.
With respect to credit risk arising from the other financial assets of the Group, which comprise bank balances,
short term deposits the Group manages that risk by dealing only with reputable banks. The Group’s exposure to
credit risk arising from default of the counterparty has a maximum exposure equal to the carrying amount these
instruments.
Due to the nature of the Group’s business, the Group does not take collaterals against receivables.
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