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The Financial Services Authority Number 18/pojk. 03/2016 2016

Original Language Title: Otoritas Jasa Keuangan Nomor 18/POJK.03/2016 Tahun 2016

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ADDITIONAL
SHEET COUNTRY R. I

No. 5861 FINANCE OJK. The bank. Risk management. Application. Revocation. (Explanation of the Republic of Indonesia's 2016 Gazette Number 53).



EXPLANATION
Above
FINANCIAL SERVICES AUTHORITY RULES
NUMBER 18 /POJK.03/ 2016
ABOUT
APPLICATION OF RISK MANAGEMENT FOR PUBLIC BANKS


I. UMUM
The activities of the Bank are constantly confronted with risks that are closely related to their function as a financial mediating institution. The nature of the development of external and internal environments also led to the further complexity of the risk of banking efforts. Therefore, in order to be able to adapt to the banking business environment, the Bank is charged with implementing Risk Management. In this regard, the principles of Risk Management that will be embraced and applied to Indonesian banking are directed in line with the recommendations issued by Bank for International Settlements through the Basel Committee on Banking Supervision. The principles are essentially a standard for the banking world to be able to operate more carefully in the scope of the development of this highly mature banking and business activity. Through the implementation of Risk Management, the Bank is expected to measure and control the risks faced in performing its business activities better. Furthermore, the application of banking-carried Risk Management will support the effectiveness of the Risk-based Bank supervision framework undertaken by the Financial Conduct Authority.
The application of Risk Management is intended not only for the Bank's interests but also for the benefit of the nasabah. One important aspect of protecting the interests of the nasabah and in the framework of Risk Control is the transparency of information related to the Bank's products or activities. Implementation of Risk Management can vary between one Bank with the other Bank in accordance with the objectives, business policies, size and complexity of efforts, financial capabilities, supporting infrastructure as well as human resources capabilities. The Financial Conduct Authority sets out these provisions as a minimum standard that must be met by Indonesian banking in implementing Risk Management. With these provisions, the Bank is expected to be able to carry out its entire activity integrated in an accurate and comprehensive risk management system.


II.   SECTION BY SECTION

Section 1
Pretty clear.

Section 2
Verse (1)
Included in the scope of the application of Risk Management is the application of the Anti-Laundering Program and the Prevention of Terrorism Financing.
Verse (2)
Pretty clear.

Section 3
The “complexity of effort ” among other diversity in the type of transactions, products or services, and the business network.
In question “capabilities of Bank” among other financial capabilities, supporting infrastructure, and human resources capabilities.

Section 4
Verse (1)
The letter a
The “Kredit& Risk-#148; is that includes the risk of credit concentration, counterparty credit risk, and settlement risk.
The risk of a credit concentration is the risk arising from the concentration of providing funds to one party or group of parties, industries, sectors, and/or geographic areas that could potentially pose a significant amount of loss. can threaten the viability of the Bank.
Counterparty credit risk is the risk arising from the failure of an opponent in its fulfillment of its obligations and arising from a transaction type that has a particular characteristic, e.g. transactions that are affected by the movement of reasonable value or market value.
Settlement risk is the risk arising from the failure of cash and/or financial instruments in the date of completion (settlement date) that has been agreed upon from the sale transaction and/or the purchase of financial instruments.
The letter b
Referred to “Risk Pasar” covering among others the risk of interest rates, the risk of exchange rates, commodity risk, and equity risk.
The risk of interest rates is the risk of changes in the price of financial instruments from the position of trading book or as a result of changes in the economic value of the position banking book, caused by a change of interest rates.
In the interest category of interest rates including interest rates from banking books that include repricing risk, yield curve risk, base risk, and optionality risk.
The risk of exchange rates is the risk of changes in the position values trading book and banking book caused by changes in the exchange rate of foreign exchange or the change in gold price.
Commodity risk is the risk of changes in the price of financial instruments from the position trading book and banking book caused by the change in commodity prices.
The risk of equity is the risk of changes in the price of financial instruments from the trading book position caused by the change in stock price.
Letter c
Pretty obvious.
The letter d
Pretty obvious.
Letter e
In question “Risk of Hukum” is the risk arising out of any other due to the absence of the provisions of the laws in favor or weakness of such a bond as not to comply with the terms of the contract or the binding The imperfect collateral.
The letter f
The following “Risk Reputation” is the risk arising from other media coverage and/or rumors of a negative bank, as well as a less effective Bank communication strategy.
The letter g
Referred to “Risk of Strategy ” is the Risk arising among others because the Bank sets out a less-in-line strategy with the Bank's vision and mission, conducting an uncomprehensive analysis of the strategy environment, and/or contained The strategy of the strategic plan between the stratejik levels. Moreover, Strategy Risk also arises due to failure in anticipation of business environment changes including failure in anticipation of technological change, changes in macroeconomic conditions, competition dynamics in the market, and policy changes Related authorities.
The letter h
Pretty obvious.
Verse (2)
Pretty clear.

Section 5
Pretty clear.

Section 6
Verse (1)
The letter a
The following “Risiko& Management strategy#148; is that it includes the designation and the risk limit both the risk as a whole (composite), per type of risk, or per functional activity.
Risk management policies and strategies are compiled at least 1 times in 1 (one) year y way of hedge, risk mitigation methods, and the addition of capital to absorb potential losses.
Verse (5)
Pretty clear.

Section 12
Verse (1)
The letter a
The report or risk exposure information includes quantitative and qualitative exposure, overall (composite) and details per type of Risk and per functional activity type.
The letter b
Pretty obvious.
Letter c
Pretty obvious.
Verse (2)
The report or information submitted to the Board of Directors may be increased by the frequency of the bank's needs.

Article 13
Pretty clear.

Section 14
Verse (1)
Pretty obvious.
Verse (2)
The letter a
Pretty obvious.
The letter b
Complete, accurate, timely, and timely financial and management information is required in order to make the right decision and be accountable, and communicated to the interested party.
Letter c
Effectiveness and efficiency in operational activities among others is required to protect the assets and other Bank resources of the associated Risk.
The letter d
The effectiveness of risk culture (risk culture) is intended to identify weaknesses and deviations in a more premature way and reassess the Bank's existing policies and procedures.

Article 15
Pretty clear.

Section 16
The letter a
The Risk Management Committee must be non-structural.
The letter b
The Risk Management work unit must be structural.

Section 17
Verse (1)
The membership of the Risk Management committee can be a permanent and unfixed membership, as per the Bank ' s needs.
The letter a
One member of the majority of Directors within the Risk Management committee is the director who oversees the compliance function.
The letter b
That is “an executive officer ” is the official who is directly responsible to the Board of Directors or has a significant influence on the Bank ' s policies or operations.
Verse (2)
The letter a
Pretty obvious.
The letter b
Pretty obvious.
Letter c
In question “a business decision that deviates from the normal procedure ” among other significant business expansion concerns over Bank business plans and position retrieval or risk exposure deviating from the limit has been set.

Section 18
Verse (1)
This arrangement is intended to allow the Bank to determine the appropriate organizational structure and suit of the Bank ' s condition, including financial and human resources capabilities.
Verse (2)
Which is “independent ” among other things is reflected by the presence:
a. the separation of functions and tasks between the Risk Management work unit with the operational work unit (risk-taking unit) and the work unit that performs an internal control function; and
B. Decision-making processes are not aligned with specific operational work units or waive any other operational work units.
Verse (3)
Given the size and complexity of different Bank efforts, the Risk Management working unit may be directly responsible to the director assigned specifically by the Bank such as the director who oversees the compliance function or the director Risk Management.
That is “the top director ” can be equated with the president ' s president.
Verse (4)
The responsibilities and responsibilities of the Risk Management work unit are tailored to the business objectives, business complexity, and the Bank's ability.
The letter a
Pretty obvious.
The letter b
Stress testing is performed in order to determine the impact of the policy implementation and Risk Management strategy on the performance and revenue of each of the Bank's operational working units or functional activities.
Letter c
In question “re-review ” among others done based on the findings of an internal audit and/or the development of an international applicable Risk Management practice.
The letter d
In question “a kajian” is the Bank ' s ability assessment to perform activities and/or new products and the study of proposed system changes and procedures.
Letter e
Pretty obvious.
The letter f
It is “a recommendation ” among others it contains recommendations related to the magnitude or maximum exposure of the Risk required to be maintained by the Bank.
The letter g
The “profile of Risiko” is a thorough picture of the magnitude of the risk potential inherent to the entire portfolio or the exposure of the Bank.
Frequency of report delivery is enhanced in terms of market conditions changing rapidly. For a relatively long-changing risk exposure, such as Credit Risk, the report delivery is delivered at least 1 times in 1 (one) months.

Section 19
In question “an operational working unit (risk-taking unit) ” among other units of credit work, treasuri, and funding.
The frequency of risk exposure information is adjusted to the type of Risk-type characteristic.

Section 20
Verse (1)
Referred to “products Bank” is a financial instrument published by the Bank.
The following “activities Bank” are services provided by the Bank to the customers, among others the services of the agency and/or custodian.
Verse (2)
The letter a
Pretty obvious.
The letter b
Pretty obvious.
Letter c
The trial period is intended to ensure that the measurement and monitoring method of the Risk has been tested.
The letter d
The accounting information system is most at least describing the risk profile and the level of profit and loss for new products or activities.
Letter e
The analysis of the legal aspects includes the possibility of the Risk of Law presented by new products or activities as well as suitability with the provisions of the laws.
The letter f
Aspects in applying information transparency to the least pay heed:
1. The information that is delivered is complete, true, and does not mislead the nasabah;
2. Information that is balanced between potential benefits that may be obtained at the risk that may arise for the customers; and
3. The deliverable information does not disguise, reduce, or cover important things related to the Risk which may arise.