Risk Management

The implementation of risk management has always been an integral part of accomplishing the Company management system. This risk management process is one of the many steps taken by the Company in order to create continuous improvement.

Risk management has a very important role in the Companies to increase profits, business continuity becomes more positive and still survive in an era of intense competition.

Risk management is intended to identify, measure, while managing the risks faced by the Company in order to avoid the losses that much more. Analysis of risk management includes accounts receivable, interest, product, quality of collateral, consumer, and so on. The results of this analysis will be used as a marketing strategy planning.

The main function of risk management is to reduce the default rate ratio, by applying sales control, especially when the consumer survey and analysis of credit for consumers who netted really worth.

The Company Risk Management is structured method logically and systematically from a series of activities which consists of defining the context, identification, analysis, evaluation, control and communication of risk.

This process is applied in all levels of activity, position, project and even with Company`s asset. The implementation of risk management in Company has provided many benefits to the start of each Company’s activity. One of them is by reducing the chances of risk. The role of risk management implementation is expected to be able to anticipate on the environmental changes that are happening so quickly, develop Corporate Governance and protecting the resources and assets of Company.

In the application of risk management, Company has a clear picture of the functions and duties, among others: shall coordinate and cooperate in promoting policies that will maintain a good working relationship between the business partners and stakeholders. Each reporting violations are recorded and followed up to be distributed to all related units to prevent future similar violations will come. To minimize the risk of such breach, the Company adopted a standard procedure (SOP) will be sustained and updated continuously adjusted in accordance with OJK rules and regulations of the capital market and other related regulators.

Business Risk

Risk of Failure to Achieve Projection

Generate profit is a challenge for the Company. Therefore, the company is always trying to increase the revenue projections in an effort to reassure investors that the business continues to run smoothly. Failure to achieve the target net profit growth projected for next year reduce the expected rate of return on investment by shareholders.

The risk of not achieving the projected managed by increasing the competence of HR related, financing portfolio adjustment, and repair strategies of the Company.

Operational Risk

Operational risk due to the reduced level of effectiveness of operational systems, procedures and controls of the Company. If this risk can be controlled, it will result in a disruption of smooth operations and quality customer services that can have an impact on decreasing the performance and competitiveness of the Company.

Operational risk is managed by means of improving operational excellence, optimizing the use of technology in implementing the Company's operations, and improve the competence of HR related.

Economic Conditions

The development of Indonesian economic conditions resulting from many factors such as inflation, higher interest rates, and the rise and fall of the rupiah against the U.S. dollar or other currencies may affect the performance of the financing.

Interest Rate Risk

Significant movement of bank rate and currency exchange rate can affect the financing impact on the Company's performance results.

Interest rate risk is managed by means of an increase in HR related competencies, financing portfolio adjustments.

Political Climate

After Indonesia successfully through the Asian financial crisis in 2008, the Company is optimistic Indonesia will experience growth in the banking sector, industrial sector, and the business sector as well as other developed countries which will affect the operational performance of finance companies in Indonesia, including the Company's performance.

Government Regulatory Risk

Risks faced by the Company relating to changes in government regulation is caused by the negligence of the Company to comply with the new regulations set by the government.

Negligence of the Company to comply with the new regulations, especially in the field of capital markets (which is now called the Financial Services Authority "FSA") issued either directly by Bapepam-LK (FSA) as a government body appointed to regulate and supervise the activities of the capital market and by statutory provisions. Failure to comply with the new regulations and the provisions of the Capital Markets (FSA) applicable in Indonesia could affect the Company's operating revenues.

Competition

At this time the business world, especially the financing industry is becoming increasingly competitive banking sector are also included in this industry. Finance companies that have a direct connection with the upstream industry will be a challenge for the Company's strategy to cultivate the competition in order to maintain its market share. In some cases it takes actions that have a negative short-term impact on margins and earnings.

Risk of Professional Workforce Migration

Every company today believe that human resources are the most important asset of the Company. The success or failure of the Company depends upon the quality of its workforce. Displacement professional workforce of the Company to other companies, especially companies to competitors who have similar activities by the Company may provide a negative influence on the performance and reputation of the Company.

This risk is managed by applying a reward system that is fair and competitive, as well as providing opportunities and a clear career path to employees of the Company.