Risk Management

[mmtl-row][mmtl-col width="1/1"][mmtl-text id="" class="" space="medium"]Ciputra Development realize that risk has become an integral part in every business process. These risks inherent in all activities and decision-making and the impact of these risks could significantly affect the stability of the company. Along with the achievement became a distinguished company, Ciputra Development requires a risk management system that is capable of managing all forms of uncertainty is the focus of the Company. Risk management is becoming increasingly important presence as a basis for decision-making by the company to ensure the company’s business continues to spin the wheel. Risk management is a culture, in which the processes and structures directed for the management of appropriate, of the opportunities and potential adverse impacts. Applied Risk Management in CompanyEffective Risk Management is very impactfull to the decisions and policies that applied in the Company. To improve the effectiveness of risk management in the Company, the Board of Directors implement multiple aspect approach to assess risks in an integrated way. Until now, the risk management system that implemented in the Company is Enterprise Risk Management (ERM). Enterprise Risk Management (ERM) is a process to manage the risk of the Company’s overall risk (firm-wide basis) that spans various types of risks, location and business activities. Coverage of the company’s risk management business line includes residential/housing, malls, hotels, apartments, offices, golf, waterpark, and hospitals.In carrying out the activities and supervision of the risks of the Company have guidelines in accordance with the characteristics and needs of the Company and in line with the process of creation of value for stakeholders. The Company has made updates to the standard risk management framework with reference to the international standard ISO 31000 risk management.The Company’s risk profiles are divided into two categories of main risks, strategic risk (reputation, in compliance with regulations, financial, etc) and operational risk (human resources, information technology, business process and SOP, etc). The collection of risk profiles is conducted through bottom-up approach from business units and enhanced by top- down feedback from BOD. Furthermore, the mitigation of the profile risks will be monitored on regular basis.To implement the function of risk management, the Company has a Risk Management Unit (UMR) that function:

1. To assist the management to build a ERM framework in accordance with the organization structure and necessity for each business unit.

2. To play an important role in conducting consolidation and main risk report which is identified in various business units for the Board of Directors.

3. To communicate strategic risk requires the Board of Directors’ attention.

4. To act as a facilitator in risk management on giving an input for risk management, risk profile supervision and effectiveness review on risk mitigation plan formed by each business unit.

The Company is always strive to improve and complete risk management that applied in the Company in order to drive the effectiveness of reporting, ease of mitigation process, and risk level supervisory. Enhancements and improvements in the Company’s risk management system can also to help increase the accuracy of decision-making by the Board of Directors. Explanations of Concerning Risks that Faced by CompanyThere are 4 types of risks that faced by the Company and must be properly managed. These four types of risk are referred to include credit risk, liquidity risk, currency exchange risk and interest rate risk. The explanation of these risks are as follows:

1. Credit Risk

Credit risk is the risk that one party to a financial instrument will fail to discharge its obligation and will result in a financial loss to the other party. The Group is exposed to credit risk from its operating activities (primarily for trade receivables from third parties) and from its financing activities, including cash in banks and time deposits.

2. Liquidity Risk

Liquidity risk is defined as the risk when the cash flow position of the Group indicates that the shortterm revenue is not enough to cover the short-term expenditure.

3. Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group’s exposure to exchange rate fluctuations results primarily from cash and cash equivalents.

4. Interest Rate Risk

Interest risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group is exposed to the risk of changes in market interest rates relating primarily to its loans from banks with floating interest rates.

 Risk Management EffortsIn managing the risks faced by, the Company was identifying the risks. Risks identified was including to the list of the risks and make a risk mitigation plan and calculated value of both the inherent risk (before mitigation) and also the value of the residual risk (after mitigation). Risk mitigation plan realization monitored and reported every three months to be recalculated the value of the residual risk every 3 months. The effectiveness of risk management can be measured from the impairment of inherent risk (before mitigation) to the value of the residual risk (after mitigation).[/mmtl-text][/mmtl-col][/mmtl-row]