The disclosure of risk management principles and the Bank’s risk exposure, including the Bank’s capital position, are reported in accordance with the Indonesia’s Financial Services Authority (Otoritas Jasa Keuangan, “OJK”) Circular _ 3~ Z+:/\ ~Z +% >
regarding Transparency and Publication of Reporting for Conventional Commercial Banks.
I. BCA’s Application of Risk Management
Guidelines for the implementation of the Bank’s risk management policies are based on OJK Regulation No. 18/POJK.03/2016 dated March 16, 2016 on the Implementation of Risk Management in Commercial Banks and is summarized as below:
I.A. Active Supervision by the Board of Commissioners and the Board of Directors
1. In carrying out their risk management functions, the Board of Commissioners has
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Board of Directors and providing guidance on improvements to the implementation of risk management policies, including evaluating the implementation of risk management, through reviewing regular reports from the Board of Directors and requesting
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deviations on policies occur.
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approval of the Board of Commissioners.
2. In carrying out their risk management ' >')#
duties and responsibilities, including:
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methodologies used for the assessment of various types of risks faced by the Bank.
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human resources and establishing a clear organizational structure in regards
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employees of the Bank in order to improve the quality and skills of
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3. Active supervision by the Board of Commissioners and the Board of Directors
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Commissioners is conducted in accordance with their duties and responsibilities as stipulated in the Articles of Association and relevant regulations.
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Committee, the Remuneration and Nomination Committee, and the Integrated Corporate Governance Committee assist in the supervisory duties of the Board of Commissioners.
a. Audit Committee, established to assist the Board of Commissioners in effectively conducting its duties ' $ # reporting, internal control systems, internal and external audits, the implementation of Good Corporate Governance (GCG), and compliance to regulations.
b. Risk Oversight Committee, established to ensure that the risk management framework provides adequate protection against the risks faced by the Bank.
c. Remuneration and Nomination Committee, established to provide recommendations to the Board of Commissioners on remuneration policies as well as systems and procedures for selection and/or replacement of members of the Board of Commissioners and the Board of Directors.
d. Integrated Corporate Governance Committee, established to evaluate the implementation of Integrated Corporate Governance through, among other tools, assessment of the adequacy of internal controls and implementation of the compliance function at the Bank and the subsidiaries.
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constructive communications with the Board of Directors.
@ ' !%% $ provides recommendations to the Board of Directors in determining strategic actions that they believe should be implemented.
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Asset Liability Committee (ALCO), Credit Policy Committee, Credit Committee, Risk Management Committee, Information Technology Steering Committee, and the Integrated Risk Management Committee.
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in discussions, provides input and monitors the internal operations of the Bank and monitors external factors that directly or indirectly affect the Bank’s business strategy.
I.B. Adequacy of Risk Management Policies and Procedures, and Determination of Risk Limits
1. The Bank’s organizational structure adequately supports the implementation of sound risk management and internal control that consists of the Internal Audit Division, the Risk Management Unit (SKMR), Compliance Unit, the Risk Management Committee and the Integrated Risk Management Committee.
2. The Bank’s risk management policy, as detailed in the Bank Business Plan and the Annual Budget & Work Plan, is in line with the vision, mission, business strategy, capital adequacy, human resources competencies, and risk appetite of the Bank. This policy is reviewed regularly and adjusted in line with both internal and external developments.
3. Policies and procedures, and determination of risk management limits, have been fully documented in writing and are regularly reviewed.
4. In conducting its business activities, the Bank has developed a Bank Business Plan and Annual Budget & Work Plan that addresses BCA’s overall strategy including the business direction. The strategy has been determined with consideration to the possible impact of the strategy on the Bank’s capital, capital projection and the Capital Adequacy Ratio (CAR) modeling.
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Monitoring and Mitigation Processes as well as Risk Management Information Systems
1. BCA’s lending and operational procedures are clearly set forth in the Bank’s operating manuals, job descriptions, policy decisions and management circulars.
2. Risk exposure is monitored regularly by SMKR through comparing the actual risk against set risk limits.
3. Reports on risk trends, including among
> (# > ! (' Reports and Business Plan Progress Reports, are submitted to the Board of Directors on a regular basis.
I.D. Comprehensive Internal Control System
1. The Bank’s internal control policy system '#$%
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control culture
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duties
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communication systems
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against policy deviations
2. The internal control systems are embedded in each business and operational unit and # ' ' ' risk management. These units are charged with risk monitoring by their Internal Control K > '#>
headquarters.
To support the implementation of risk management, the Bank has detailed risk management policies, procedures, and risk limits. The Bank strongly encourages a culture of compliance with regards to applicable regulations. Internal control is conducted by SKMR and the Compliance Unit that together form the second line of risk management defense.
The adequacy and effectiveness of the internal control system is periodically reviewed by the Internal Audit Division, which is the third line of risk management defense, to ensure that internal controls have been implemented adequately.
3. All management and employees of the Bank have roles and responsibilities to implement and adhere to the Bank’s internal control systems.
Risk Management and Internal Control Organization Structure
monitoring lines
BOARD OF DIRECTORS
CREDIT DIRECTOR
COMPLIANCE &
RISK MANAGEMENT DIRECTOR^
BOARD OF COMMISSIONERS
DEPUTY PRESIDENT DIRECTOR#
DEPUTY PRESIDENT DIRECTOR
Credit
Analysis Enterprise
Security Risk
Management*
Credit
Recovery Compliance*
Risk Oversight Committee Asset & Liability
Committee (ALCO) Credit Policy
Committee Credit Committee Risk Management
Committee Integrated Risk
Management Committee
Enterprise Risk Management
Credit Risk Management
Market Risk Management
Operational Risk Management
Integrated Corporate Governance Committee
Audit Committee
BCA Finance BCA Finance Ltd.
Hong Kong BCA Syariah BCA Sekuritas
Asuransi Umum BCA Central Santosa Finance Auransi Jiwa
BCA
communication lines
reporting lines