1.

0 Introduction
The purpose of the report is to identify the specific risk and opportunities that affect Qian Hus ability to create
short term, medium term and long term value over time, as well as the actions that Qian Hu Corporation took to
mitigate the risks.
2.0 Approach to Risk Management
The Board has the role to protect the interest of the company and ensure that risks are effectively managed
across the Group. There are two committees that assist the Board in risk management. Firstly, Qian Hus Audit
Committee assists the Board in reviewing the effectiveness of the group risk procedures in place. Secondly, the
Risk Management Committee provides a clearer overview of the material risks faced and the countermeasures in
place to mitigate the risks. After identifying risks in the respective business areas, individual business area is
required to assess and manage the risks.
Risks are constantly reviewed and updated to reflect changes in market conditions. The risks are prioritised
based on the likelihood of occurrence and the impact to the Group, which is reported to the Executive Board for
review, before final review and approval by the Group Board.
3.0 Key areas of focus
The objective of the risk management approach is to ensure that business objectives are achieved by embedding
management control into day-to-day operations. This allows Qian Hu to achieve efficiency, effectiveness in
ensuring compliance with legal and regulatory requirements as well as the integrity of the Groups financial
reporting and related disclosures.
4.0 Principal risks and uncertainties
We have considered the risks that the Group may face and categorised the significance of risk based on the
likelihood and impact to the Group. The Group have chosen the risks based on the following factors:
1)

External to our business

2)

Core to daily business operations

3)

Related to business change activity;

4)

Future impact to the business

The table below shows the potential risks that may occur in the business and the actions taken to mitigate the
risks.

Risk

Description

Mitigating activities

Operational

Potential

Risk

breakdown in internal processes,

o
1

loss
in

caused
people

by

Unexpected loss

deficiencies

and

incurred from

management, or operational failure

Implement series of quality and

o
o

people management programs

Plan for business continuity
Attain continuous certification of its
businesses

as

well

as

its

operational

arising from external events

environmental management system.

lapses

planning program to identify and

Risk of loss of

Viewed as a family business

specialised skills

largely run and controlled by the

and expertise of

Yap family. Although no individual

founding

is

members

specialised skills and the leadership

indispensable,

of

the

the

loss

founding

develop

result

interruptions

and

team

of

talented

whereby family members are not

of
o

members,

in

employees based on their merit

given special preferences.
Train a team of next-generation
leaders which should last beyond

including the key management,

could

Implement a structured succession

this generation.

business
a

loss

in

fish

are

shareholders confidence.

Product Risk

Different

breeds

of

Fish segment are

vulnerable to different types of

health management and quarantine

susceptible to

diseases. It is possible that a rare or

system for all its domestic and

disease and

virulent strain of bacteria or virus

overseas operations to ensure a

infection

may infect a particular breed of fish

consistently high standard of good

in the farm.

health care management and hygiene

Institutionalised a comprehensive

for the fishes.

Attain continuous certification in the
Groups domestic and overseas fish
operations including the breeding of

Dragon Fish.
Till date, there is no known disease
that is fatal to the Dragon Fish
because

of

its

primitive

and

prehistoric origin.
Reliant on a

Dragon

Fish

sales

contributed

single product

approximately 12% of the Group

total revenue for the year ended 31

Diversified products such as fish,

accessories and plastic segment.

Provide export for over 1000 species
of fish to over 80 countries to ensure

December 2014

that Qian Hu is not overly reliant on

the sale of any particular type or
species of fish.
3

Foreign

Sales, purchases and borrowings

Exchange Risk

are

Risks of

denominated

in

Monitor the exchange rate of major

currencies constantly
Enter into hedging contracts with

foreign

currencies apart from Singapore

banks as and when management

fluctuations in

dollars.

detects

exchange rates

any

movement

in

the

respective exchange rates that may

affect the Groups profitability
o

Place foreign currency in accounts

for funds to be converted when it is
necessary.

Liquidity Risk

Funds need to be available for the

Risk of

Group to meet the contractual and

insufficient

financial obligations when it is due.

funds when

Monitor of net operating cash flow

constantly

Maintain sufficient levels of cash

obligations are

and cash equivalents for working

due.

capital purposes and to mitigate risks

of fluctuations in cash flows.

5.0 Conclusion
In conclusion, Qian Hu Corporation Ltd faces risks such as operational risk, product risk, foreign exchange risk
and liquidity risk. The risks may impact Qian Hu if they are not properly monitored. The Board, Audit
Committee and Risk Management Committee play an important role in ensuring that the risks are properly
managed by implementing countermeasures to mitigate and respond to the risks. The three parties have to take
timely actions to mitigate risks identified.