Governance
As Malaysia’s sovereign wealth fund, Khazanah maintains strong corporate governance and embeds risk management as a core part of our organisational culture.
Following the strategic refocus of our mandate in 2019, we enhanced our governance and risk management capabilities to support our long-term goals.
This included elevating our risk maturity, embedding structured risk approaches across functions and strengthening the capabilities of our governance, risk and compliance teams.
Governance and Accountability
Risk Appetite and the Framework of Integrity, Governance and Risk Management
Khazanah’s Risk Appetite defines the level of risk we are prepared to accept in delivering our dual mandate, generating risk-adjusted financial returns through commercial investments and achieving socioeconomic outcomes.
This is supported through:
Strategic Asset Allocation
Reflects the Board’s risk appetite and long-term market outlook, aimed at optimising risk-return balance and capital efficiency
Risk Appetite Statements
Set limits and Management Action Triggers (MATs) for liquidity, insolvency, investment, operational and reputational risks
Stress Testing & Scenario Analysis
Evaluates portfolio resilience under adverse but plausible macroeconomic scenarios
Credit Rating and Liquidity Management
Preserves investment-grade credit quality through disciplined asset-liability management and adequate liquidity buffers
Enterprise Risk Management (ERM)
Monitors exposure across Investment, Asset-Liability Management (ALM), ESG, Operational and Strategic risk categories
Khazanah’s Framework of Integrity, Governance and Risk Management (FIGR) outlines our governance structure and responsibilities, based on the Three Lines of Defence model adopted since 2004. The framework supports effective risk oversight and promotes a strong culture of integrity and accountability across the organisation.
Governance Structure
The Board holds ultimate responsibility for overseeing risk management at Khazanah. Risks are managed using the established Three Lines of Defence governance model.
Our Framework of Integrity, Governance and Risk Management (FIGR) is grounded in our Core Values: accountability, mutual support, respect for diverse perspectives and integrity in all that we do.
The Board, chaired by the Prime Minister of Malaysia, is supported by three sub-committees:
Executive Committee (EXCO)
Assists the Board in deliberating strategic, financial and investment matters
Audit and Risk Committee (ARC)
Oversees internal controls, risk management and audit integrity
Nomination and Remuneration Committee (NRC)
Advises the Board on human capital matters related to directors, senior management and employees
Framework of Integrity, Governance and Risk Management
1
SAA
Strategic Asset Allocation
2
ALM
Asset and Liability Management
3
K-3P
Khazanah’s Policies, Procedures & Practices
4
ERM
Enterprise Risk Management
5
ORM
Operational Risk Management
6
BCM
Business Continuity Management
7
EXCO
Executive Committee
8
ARC
Audit & Risk Committee
9
NRC
Nomination & Remuneration Committee
Khazanah’s governance structure is based on the Schedule of Matters for the Board (SMB) and Limits of Authority (LOA).
The SMB defines the responsibilities of the Board and its sub-committees, while the LOA sets authority limits for senior management, supporting clear accountability across the organisation.
The RICA matrix, Recommend, Inform, Consult, Approve, complements the SMB and LOA by providing checks and balances across decision-making processes.
01
Management Committee (MC)
The Management Committee (MC) reviews strategic and operational matters, including financial and organisational performance
02
Investment Committee (IC)
The Investment Committee (IC) evaluates and approves investment and divestment proposals within the authority levels set by the LOA
Operationally, we remain guided by Khazanah’s Policies, Processes and Procedures (K3Ps), which include key documents such as the Investment Policy, Sustainable Investment Policy, Shareholder Expectations and Investment Stewardship, ESG Framework, Code of Business Ethics and Code of Conduct, all accessible on our website.
To promote consistency and good governance, we have adopted a framework to standardise the implementation of K3Ps. This includes using set templates, defined approval levels and regular updates by designated document owners.
Level 1
Framework / Policy
Framework and Policies are to be approved by the Board or Board Committee (EXCO, ARC, NRC)
Level 2
Process and Procedures – Enterprise P&P
Enterprise P&Ps are to be approved by the MD
Level 3
Divisional P&Ps
Divisional P&Ps are to be approved by this HOD
Guidelines / Manuals
Guidelines / Manuals are to be approved by the HOD
Governance, Risk and Compliance Division
While the Audit and Risk Committee (ARC) oversees risk management at Khazanah, the Governance, Risk and Compliance (GRC) Division is responsible for implementing the Board’s strategic direction on risk matters.
The GRC, through the Chief Risk Officer (CRO), reports directly to the ARC and administratively to the Managing Director. This dual reporting structure ensures independent governance through clear separation of duties.
Together with the Internal Audit & Investigation team, GRC supports the Second and Third Lines of Defence within Khazanah: