PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended June 30, 2006 Unaudited and 2005 Audited Expressed in millions of Rupiah, unless otherwise stated
129
56. RISK MANAGEMENT continued
The Risk Management Directorate is managed by a Director whom is responsible to the Board of Director and also a voting member of the Risk and Capital Committee. The Risk Management Directorate is
divided into 2 two main functions: 1 Credit Approval as a part of the four-eye principle, and 2 Independent Risk Management which is divided into several groups in relation with credit and portfolio
risk, operational risk and market risk. In response to the Bank Indonesia Regulation No. 725PBI2005 regarding Certification of Risk Management
for the Management of the Bank, the Bank has enrolled their employees from Risk Management and related Business Units into the Risk Management Training and Risk Management Certification which is conducted by
Badan Sertifikasi Manajemen Risiko BSMR in cooperation with Global Association of Risk Professionals GARP. Through intensive internal certification training, the Bank will be prepared with human resources
with risk management certification in accordance with BI regulation.
Credit Risk Bank has established credit policies and guidelines, which includes the Bank Mandiri Credit Policy
KPBM, Credit Manual PPK, and various circular letters that constitute a more detailed operating manual. The purpose of those guidelines to provide a comprehensive loan management manual related to
loan application, analysis process, approval process, documentation, monitoring and restructuring processes, including risk analysis and assessment. In order to ensure prudential loan process, the Bank
reviews and improves its credit policies KPBM PPK to fit with the current business periodically. In general, credit risk management is implemented on both transactional and portfolio level. On
transactional level, the Bank has implemented four-eye principal whereby every loan approval will involve Business Unit And Risk Management Unit independently to obtain an objective decision. Since the
establishment of Credit Approval Committee on June 16, 2005, the loan approval process is conducted through the Credit Approval Committee and credit decisions are made by the Bank’s officials from the
Business Unit and Risk Management Unit that has a credit approval authority. Therefore, the loan process becomes more comprehensive and more prudent.
Bank Mandiri Rating System BMRS, Small Business Scoring System SBSS, Micro Banking Scoring System MBSS have implemented in Loan Approval process to increase credit risk measurement
combined with Credit Proposal and Financial Spread Sheet Financial Analysis produced high quality credit decision. To ensure that Credit Risk Models that used in BMRS, SBSS, and MBSS are proven and
reliable, the Bank has developed guidance in designing and developing the Credit Rating and Credit Scoring Model.
In order to maintain the performance and predictive capability of Bank Mandiri Rating System BMRS, the Bank has calibrated and reviewed financial rating model and performed modifications to the qualitative
parameters in order to decrease subjectivity in rating activities. The calibration and review process are performed continuously every year.
The Bank continues to prevent the increase in non-performing loan including by improving the credit review form to be risk analysis oriented and comprehensive in order to support the credit decision in
accordance with prudential banking. Furthermore, the Bank has developed Early Warning Analysis for performing debtors with the purpose of reducing the related debtors’ potential to be downgraded into non-
performing loan as the management could take proper action in resolving the related matters early.
PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended June 30, 2006 Unaudited and 2005 Audited Expressed in millions of Rupiah, unless otherwise stated
130
56. RISK MANAGEMENT continued
