Reference no: EM133137061

Question - Sinar Bhd. (Sinar) is a listed company in Bursa Malaysia. It was founded many years ago. It is located in Kajang, Selangor. Under the listing rules and regulations, the company is required to have an Enterprise Risk Management system as part of corporate governance to safeguard the stakeholder's interests.

Sinar has a large warehouse. It provides storage spaces for insulation materials for electrical manufacturers located in the Klang Valley. In recent years, flash floods occur quite often in Kuala Lumpur and Kajang is of no exception. Insulation material that is stored in the warehouse is flammable. The internal auditor has highlighted to the management that the store hands have manipulated the client's stock level balances, resulting in bad reputation. Accordingly, a report was submitted to the Risk Management Committee to review the company's internal control in their next meeting.

Growth of the warehousing industry is slow, as most industries are affected by the Covid-19 pandemic. The Board of Directors has decided to diversify into the generation of green energy using solar panels. This industry has attracted many investors. The capital outlay is large and the finance director commented that the company current liquidity is an issue. The company's gearing is high and it is very difficult to obtain additional finance from the local financial institutions to fund this green energy project. Besides, receipts from trade debtors are slow and debtors outstanding at end of each accounting period is significantly high.

Required -

(a) Identify the key risks and illustrate the risk assessment on the storage of insulation materials using the concept of impact and likelihood approach. Recommend how the risks could be managed and mitigated by Sinar Bhd.

(b) Identify THREE (3) the risks could be managed and mitigated by the company.

(c) Discuss FIVE (5) reasons why corporate governance is important to multinational companies.