Risk Management

Risk Management is a part of creating a good corporate governance. The implementation of GCG principles is expected to encourage the accuracy in drawing up a risk map, suppress the likelihood of risks and the impact as well as preparing accurate and efficient risk mitigation. As a result, the Company’s management will run smoothly and be able to improve the operational and financial performance of the Company. The successful achievement of a Company’s activities are also greatly influenced by how well the risks have been managed. The management is very aware of the importance of risk management to achieve the objectives in line with expectations to be met. Therefore, commitment is needed to apply risk management is not only for the top management, but also for all Company bodies in carrying out the Company’s activities.

To increase the culture of risk awareness, the Company carries out socialization and trainings on risk management were held in accordance with the needs. To ensure that the implementation of risk management activities goes well, the management sees the need for supervision in the form of integrated internal audit in the Company’s program namely Internal Quality Audit (“AMI”), as well as the risk-based audit conducted by SPI.

Financial Risk

• Interest Rate Risk
  Interest rate of cash flows risk is the risk in which future cash flows from a financial instrument are fluctuated due to the change in interest rate market. As of today, the main risk exposure is from bank loans used for working capital and investment. The policy formulated by the management in anticipating interest rate risk is through evaluating the comparison of floating interest rate with the relevant changes of interest rate in the market periodically. The management also conducts survey in the bank sector to obtain estimation on relevant interest rate.
• Liquidity Risk
  Liquidity risk is the risk in which the cash flows position indicates that short-term income is not sufficient to cover short-term expenses. The liquidity risk exposure is in the form of the Company's difficulty in fulfilling the financial obligations that must be paid with cash or other financial assets. The Company is expected to pay all of its liabilities in accordance with the contractual maturity date. In fulfilling such liabilities, the Company must generate sufficient cash flows income. The Company manages its liquidity risk by maintaining sufficient cash and cash equivalents in fulfilling the commitment of the Company for normal operations and periodically evaluating cash flows projection and actual cash flows, as well as maturity date of assets and financial liabilities.
• Foreign Exchange Rate Risk
  Exposure of foreign currency exchange rate is a part of normal operations of the Company. However, the transactions from foreign currency is counted as materials. Therefore, the impact of foreign currency exchange rate is not significant.
  
  

Business Risk

Investment in the Company's shares is inseparable from a variety of risks. Prospective investors must carefully consider the risk factors below, as well as other information mentioned in this annual report, before investing in the Company's shares. The risks described below are not the only risks that may affect the investment on the Company's shares. Other risks that are not presently known to the Company or presently not considered to be significant may also affect the business, cash flows, operational results, financial conditions or business prospects of the Company. The risks disclosed in the annual report below are the material risks to the Company which have been prepared by the Company in accordance with the risk value that is started from the main risks of the Company.