• Centralization of term liquidity managementshort. • Guarantees, loans and commitments given or obtained by BRI from Subsidiary Companies. • Exposure to controlling shareholders, including loan and off-balance sheet exposure such as guarantees and commitments. • Purchase or sale of BRI assets to Subsidiaries. • Risk transfer through reinsurance. • Transactions to transfer third party risk exposure between entities in BRI’s Financial Conglomeration. b. The process of identifying intra-group risks is carried out by analyzing each type of intra-group transaction in BRI’s Financial Conglomeration business, which can be based, among other things, on past experiences of losses. 2. Intra-group Risk Measurement a. In order to carry out intra-group risk measurements, the Main Entity carries out: • regular evaluation of the suitability of assumptions, data sources and procedures used to measure risk, in accordance with business developments and external conditions that influence the financial condition of the Financial Conglomerate; And • improvements to the risk measurement method if there are changes in factors that materially and significantly influence risk, including if there is the addition of a new business line that could affect the financial condition of the Financial Conglomerate. b. Risk measurement methods and systems can be carried out quantitatively and/or qualitatively which are used to measure BRI Financial Conglomeration risk exposure as a reference for carrying out control. c. The selection of measurement methods and systems is adjusted to the characteristics and complexity of the Financial Conglomerate’s business activities. d. Measuring methods and systems must at least be able to measure: • the sensitivity of the Financial Conglomerate to changes in factors that influence it, both under normal and abnormal conditions; • the tendency of changes in the factors in question based on fluctuations that have occurred in the past and their correlation; • individual level of risk; • overall risk exposure and per risk type, taking into account the relationship between risk types; And • all risks inherent in all BRI Financial Conglomeration transactions which can be integrated into the Management Information System. d. The risk measurement process must clearly contain the validation process, validation frequency, data and information documentation requirements, evaluation requirements for the assumptions used, before a methodology is applied by the BRI Financial Conglomeration. 3. Intra-group Risk Monitoring a. The Main Entity monitors the magnitude of risk exposure, risk tolerance, limit compliance, and stress test results as well as consistency of implementation with established policies, procedures and limits. b. The Main Entity prepares an effective back-up system and procedures to prevent disruptions in the risk monitoring process, and carries out regular checks and reassessments of the back-up system. c. In order to carry out risk monitoring, the Main Entity carries out: • evaluation of risk exposures through monitoring and reporting risk exposures that are material or have an impact on the capital condition of BRI’s Financial Conglomeration; and • improving the reporting process and coverage, among other things, if there are material changes to business activities, products, transactions, risk factors, information technology and the Integrated Risk Management Information System. 4. Intra-group risk control a. The Main Entity determines the Risk Appetite and Intragroup Risk limits in accordance with the risk philosophy and applicable regulations. Determination of risk limits is adjusted to risk exposure, the level of risk to be taken and risk tolerance. b. Other risk controls can be carried out, among others, by hedging, formulating methods for calculating intragroup transactions, and increasing capital to absorb potential losses. In the second semester of 2022 and the first semester of 2023, BRI’s intra-group risk is at a low to moderate risk rating. Implementation of Integrated Governance In 2023 1. Strengthening the Implementation of Integrated Governance of Financial Conglomerates In 2023, improvements and strengthening of the implementation of Integrated Governance of the BRI Financial Conglomerate will be carried out, including those related to: a. Updating and improving the General Policy on Integrated Governance for the BRI Financial Conglomerate b. Measuring the level of maturity (maturity) of Integrated Governance in the BRI Financial Conglomerate 2. Implementation of the Duties and Responsibilities of the Integrated Governance Committee The implementation of the Integrated Governance Committee’s duties during 2023 is discussed in the Integrated Governance Committee Sub-Chapter in the Corporate Governance Chapter in the 2023 Bank BRI Annual Report. 3. Implementation of Duties and Responsibilities of the Integrated Compliance Unit During 2023, details of the implementation of the tasks and responsibilities of the Integrated Compliance Unit were as follows: PT Bank Rakyat Indonesia (Persero) Tbk. Annual Report 2023 785 Corporate Governance
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