(c) Equity price risk Equity price risk is the risk that the fair value of equity securities fluctuates as a result of the changes in the prices of those securities. The Group and Company are not exposed to significant equity price risks as it does not have any significant equity financial assets. (d) Credit risk Credit risk is defined as the potential that a borrower or counterparty will fail to meet its obligations in accordance with agreed terms. Credit Risk at the Group and Company arise mainly from various forms of lending covering all the credit portfolios; credit facilities, money lending, credit cards, factoring, and leasing as well as deposits and balances held with banks. The effective management of credit risk is a critical component of risk management and essential to the long-term success of the organization. The Risk Management Committee has oversight of the management of the credit risk framework. The Group and Company regularly monitor any significant concentration of credit risk, to single or group of connected customers, to industry sectors, and customer segments. The analysis of concentration by industry sector is disclosed in the Risk Management section of the annual report. Leases and other credit agreements granted are also effectively secured as the rights to the leased assets revert to the lessor in the event of default. The majority of the assets financed under lease are motor vehicles with the remaining being various types of equipment. The period is normally up to 7 years for leases and up to 5 years for other credit agreement; and the interest are a mix of both fixed and floating rates. The risk associated with any rights retained under operating lease arrangements in the underlying assets being leased are reduced through buy-back arrangements, residual value guarantees and variable lease payments for use in excess of specified limits . The Group and Company also make the calculations of credit impairment, in line with the IFRS 9 Financial Instruments standard. In light of COVID-19 and the macro economic uncertainties, CIM has adopted a probabilitistic approach on forward looking scenarios incorporated in the base model so as to cater for the higher level of uncertainty in the economy, represented by three severities (baseline /most likely, upside and downside) with assigned weights suggesting the likelihood of such event occuring based on assessments of economic and market conditions. Various stress tests are conducted on the ECL to ensure adequacy of provision so as to withstand any loss arising from significant exposure to a sector, single customer and group of closely-related customers. With the revised models, the adequacy of provision has been reassessed for the three stages considering COVID-19 impact and the macroeconomic environment. 133 OUR YEAR AT A GLANCE OUR PEOPLE GOVERNANCE FINANCIAL STATEMENTS
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