Risk Management is the responsibility of all management in each business unit with the task of identifying and managing risks in accordance with the authority of each related unit. In the face of industry conditions that are full of challenges. The Company prioritizes risk management principles that are based on risk avoidance, reducing the risk of negative effects and holding part or all of the consequences of certain risks.
Risk management is a culture, where processes and structures are directed at managing management appropriately, with potential opportunities and adverse impacts. Management of risk management is carried out through systematic, integrated and optimal procedures. The procedure for implementing risk management begins with the risk identi cation process that aims to identify various risk factors that may arise and hinder the company’s operational and managerial. The next step is controlling risk which is re ected in the implementation of risk management. The Company carries out various efforts needed to minimize the possibility of the occurrence of risks as well as improvement efforts to overcome the negative implications of these risks. Risk control efforts will be carried out on an ongoing basis to prevent a signi cant decline in the value of the company while maintaining competitiveness.
Types of Risk
1. Capital Risk
The Company manages capital risk to ensure the ability to continue the business continuity and operations of the company, in addition to maximizing the balance of debt and equity. The capital structure of the Company consists of cash and the shareholders’ equity and non-controlling interests.
The Board of Directors periodically evaluates the capital structure. As part of the evaluation, the Directors and management consider capital costs and related risks.
2. Credit Risk
Credit risk is a risk where one party to a nancial instrument will fail to ful ll its obligations and cause the other party to suffer a nancial loss. Credit risk faced by the Company comes from operating activities (mainly from trade accounts receivable from af liated parties).
3. Liquidity Risk
The Company faces liquidity risk if it does not have suf cient cash ow to meet operational activities and nancial liabilities at maturity.
Evaluation and Effectiveness of Risk Management
The Company strives to carry out a comprehensive risk assessment. The internal control system in each function is the main factor that directly plays a role in risk management.