The Company's Risk Management System
Risk management system is an important part in good corporate governance, which needs a strong commitment manifested by the Board of Directors through risk management governance. At present, the Company already has in place the infrastructure to govern risk management and other supporting elements.
Types of Risks and The Management
The Company's Risk Management and Insurance Committee has classified four (4) categories of risks in the Company's business, as follows:
1. Operational Risk
Operational risk includes management of the risks related to:
• Availability of labors
• Availability of raw materials and energy
• Quality of relationships with the community living surrounding the factories. The Company has undertaken operational risk management by performing the following actions:
- Rearrange the activities related to the Company's main activities.
- Make efficient use of energy and raw materials.
- Improve the quality of a harmonious relationship with the local community through community development programs.
- Conduct a comparative study to other companies with respect to operational activities.
2. Financial Risk
The Company classifies financial risk to include fluctuations in foreign currency exchange rates, changes in laws and regulations related to finance, risk of a breach in taxation and commitment in implementing Capital Market regulations.
To minimize financial risk, the Company continues to increase export sales, so that the Company's revenues in foreign currency can be protected naturally (Natural Hedging). For working capital purposes, the Company has also secured credit facility from Bank that can be used by the Company when required. The Company also always keep abreast of the development of the laws related to finance in order to overcome financial risks that may emerge.
3. Legal Risks
To manage legal risk, the Company always ensure that any business activity are in compliance with applicable laws and regulations both domestically and internationally.
The Company continues to conduct regular evaluation on the level of its compliance in running its business. The Company has an experienced personnel in the field of law and established cooperation with some legal counsels. The Company also conducts education and training for management and employees regarding legal knowledge and disseminates new regulations related to the Company's business activities.
4. Hazard Risk
Hazard Risk may occur at any time and the Company believes that special attention to this matter is
necessary. Such risk includes occupational health and safety, environmental and natural disasters. To overcome these, in 2014 the Company undertook several efforts, among others:
a. Carrying out dissemination and trainings on occupational health and safety intensively and
b. Conducting health education and regular medical checks as well as blood donors.
c. Establishing a standardized measurement system for analyzing waste and disposal proceeds.
d. Forming Emergency Responses Team (ERT) and simulating emergency trainings related to the
tsunami and earthquake.
Risk Management Governance Evaluation
Risk Management and Insurance Committee together with the Board of Directors perform an evaluation to risk management governance based on results of the audit that has been done. Results of this evaluation are informed to related divisions for follow up and correction.
Jl. Ancol IX/5 Ancol Barat, Jakarta 14430, Indonesia.
Phone: 021-6904041 (8 lines)
Fax: 021-6918709, 69000470