59 I N T E G R A T E D R E P O R T 2 0 2 1 PRINCIPAL RISK DESCRIPTION RISK RESPONSE CREDIT RISK Movement during the year: Cim Finance manages its credit risk with appropriate credit approval structures, policies, processes, reporting, and independent control functions. An increase in credit risk has been noted since the emergence of COVID-19. In response to a rapidly evolving situation, we have taken steps to prudently manage our exposures by tightening our credit policies and reviewing the credit scorecards and prudential limits in order to maintain risk at an acceptable level. The Debtors Monitoring Committee and the Risk Analytics forum regularly meet to review the exposures and any early warning signs, and recommend appropriate client treatment strategies. Exposures showing signs of deterioration are placed on our watchlist, and prompt actions are taken, such as migrating the concerned clients to the appropriate stage under IFRS 9. In addition, we conducted regular reviews and scenario analyses in terms of the impact on IFRS 9 Expected Credit Loss (ECL) to ensure the adequacy in provisioning. We have adopted a prudent approach in this uncertain economic environment by providing an additional buffer for ECL during the year, with cumulative ECL of 9.0% of gross loans as at 30 September 2021 (30 Sep 2020: 7.1%) COVID-19 RELATED RISKS Movement during the year: A response plan was promptly prepared in response to the COVID-19 pandemic. The health and safety of all our employees and stakeholders were, and continue to be, our priority. The implemented measures include reinforcing our sanitary protocols and introducing remote working to allow applicable staff to work from home. CONCENTRATION RISK Movement during the year: Concentration to certain high-risk sectors is closely monitored and reported by the Risk team to the Portfolio & Credit Risk Forum and to the Board’s Risk Management Committee. The diversification of our portfolio has been recommended and controls in terms of prudential limits are in place. The principal risks identified at the end of the year under review are as follows: R I S K M A N A G E M E N T
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