Page 27 - NYAA FY2024

Docusign Envelope ID: F067D57E-6E60-4F26-8227-97F17DC4DBB9

NATIONAL YOUTH ACHIEVEMENT AWARD ASSOCIATION

NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2024

14. Financial risk management (continued)

Financial risk factors (continued)

(b) Credit risk

Credit risk refers to the risk that the counterparty will default on its
contractual obligation, resulting in financial loss to the Association.

(i) Risk management

The Association adopts the following policy to mitigate the credit risk.

For banks and financial institutions, the Association mitigates its
credit risks by transacting only with counterparties with high credit
ratings as determined by independent rating agencies.

For other receivables, the Association has adopted a policy of only
dealing with creditworthy counterparties as a means of mitigating the
risk of financial loss from defaults.

There is no significant concentration of credit risk, whether through
exposure to individual customers, specific industry sectors and/or
regions.

(ii) Credit rating

The Association uses the following categories of internal credit risk
rating for financial assets subject to expected credit losses under the
3-stage general approach. These four categories reflect the
respective credit risk and how the loss provision is determined for
each of those categories.

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