The risk management framework has been set systematically based on steps that started from identification, measurement, anticipation to minimize risks, monitoring and risk control at all levels in terms of credit risk, market risk, interest risk, liquidation risk, foreign exchange risk, reputation risk, anticipated changes in laws and regulations that may be detrimental to the business of the Company, its subsidiaries and affiliated businesses.
The framework of Company’s risk management is applied through the following steps:
- Identification of risk on every business unit. Every company has its own unique risk, depending on the characteristic of the industry, Company’s internal condition such as financial position, and external factor that may affect business activity, such as regulations and market condition, and others.
- After the risk has been identified, the next step is to conduct internal meeting to discuss anticipation plan to minimize risks. Working plan on all respected fields will then be discussed between departments through regular meeting at least, once every month.
- The evaluation process on current issues along with follow up on in solving the issues are conducted regulary every month in inter-department meeting. The result will be reported in Board of Directors’ meeting. Then Board of Directors will evaluate the result and provide the nessecary direction, decision, and input for improvement. Organizing strategic measures in minimizing and eliminating the identified risks is extremely crucial.
- Monitoring and controlling the risk may avoid and eliminate risk. Therefore, each business line down to the smallest unit should understand its business field as well as having quick response to anticipate external factor that may impacting business result at the end.
The implementation of risk management was performed under direct supervision from Audit Committee and Board of Commissioners. The culture of risk management has always been upgraded within Company’s organization to assure that all business units understand about the risk management strategy, risk level and management risk framework. The development of risk management culture is essential to achieve business target and Company’s sustainability according to the Company’s vision and mission.
In 2014, the Company has implemented the risk management system like anticipation on lack of using hotel’s facilities during election 2014 and restriction in using hotel facilities for any government events organized by state departments. The anticipation was made by increasing market share through online travel agent, private companies segment and MICE (Meeting, Incentives, Conference & Exhibition). As the fuel price and electricity tariff escalated, the Company anticipated by changing the air chiller machine in Hotel Borobudur Jakarta with a more one efficient and environmentally friendly chiller machine.
Borrowing denominated in foreign currency by a subsidiary is matched by its revenues that are in foreign currency, hence, mitigating the currency risk exposure. Considering the market condition as well as the economic prognosis, long-term construction needs to be reevaluated without compromising plans and activities which have always been updated and adjusted to meet market needs and demands.