The process of building and maintaining Enterprise Risk Management ERM

258 PT Telkom Indonesia Persero Tbk

6. Assessment of the Efectiveness of the implementation of risk management

Assessing the efectiveness of risk management implementation is done through the evaluation process, including: • Through Evaluationone-on-one discussion with business units as needed. • Through Workshop-sharing implementation and development of ERM with subsidiaries as needed • Through the Implementation of Risk Management Audit program as needed • Through Evaluation with the Risk Committee, Compliance and Revenue Assurance at BoD level as needed • Through Evaluation with the Planning and Risk Evaluation Monitoring Committee PREMC as needed

7. sharing session and recognition of external parties

In 2015, Telkom received a visit from external parties for an implementation of Risk Management, Internal Control, Process Management, Good Corporate Governance and Management of Insurance sharing session, among others, from: PT Semen Indonesia : January 11, 2015 PT Perkebunan Nusantara IX : February 15, 2015 Perum BULOG : March 11, 2015 Pembangkit Jawa Bali : May 19, 2015 PERTAMINA Patra Niaga : August 04, 2015 PT PLN : September 11, 2015 Other than the implementation of Risk Management in 2015, Telkom received recognition or awards from external parties, namely: No External institution Type of Award 1 PT SGS Indonesia Integrated Management System for Infrastructure management including: •ISO 9001:2008 Certiicate - Quality Management System •ISO 27001:2013 Certiicate - Information Security Management System •ISO 22301:2012 Certiicate - Business Continuity Management System • Maintain Continuity Competency Development. • Maintain consistency of communication and socialization. • Developing a mechanism for assessing the effectiveness of the implementation of Risk Management.

4. development of risk management Competence

In 2015, we have carried out the development of risk management competencies, including: No. Type of Training Date 1 Internal Control over Financial Reporting ICFR June 2015 2 Certiied Lead Auditor ISO 22301 Business Continuity Management System September 2015 3 Hedging September 2015 4 Emergency Flood Evacuation Response Simulation October 2015 5 Internal Auditor Business Continuity Management October 2015 6 Certiied Risk Associate December 2015 Besides through Classical Training, competence development is also done through socialization as well as related Workshops on Risk Management in the Oice Division environment and its subsidiaries.

5. tools usageinformation system

To perform the function of Risk Management, Telkom has provided the supporting infrastructure using applications tools information systems, among others: a. Generic Tools Enterprise Risk Management Online ERM Online that is used by the entire unit for management of Risk Assessment b. Speciic Tools for speciic risk management objectives, for example: • Fraud Management System FRAMES Application that is used for an early detection system of potential Customer Fraud • i-Library application which is managed by the Division Network of Broadband and is used for the management of the documentation system, namely the Integrated Management System • SMK 3 Online application managed by the Security and Safety Unit for the Health and Safety documentation management. • Security Safety Application managed by the Security Safety Unit to monitor the management of Physical Security • Telkomcare application for coordinating the Crisis Management Team 259 PT Telkom Indonesia Persero Tbk RISK FACTORS

A. Risks Related to Indonesia

1. Political and Social Risks

Current political and social events in Indonesia may adversely afect our business Since 1998, Indonesia has experienced a process of democratic change, resulting in political and social events that have highlighted the unpredictable nature of Indonesia’s changing political landscape. In 1999, Indonesia conducted its irst free elections for parliament and president. Indonesia also has many political parties, without any one party holding a clear majority. Due to these factors, Indonesia has, from time to time, experienced political instability, as well as general social and civil unrest. For example, since 2000, thousands of Indonesians have participated in demonstrations in Jakarta and other Indonesian cities both for and against former President Abdurahman Wahid, former President Megawati, and former President Susilo Bambang yudhoyono as well as in response to speciic issues, including fuel subsidy reductions, privatization of state assets, anti-corruption measures, decentralization and provincial autonomy and the American-led military campaigns in Afghanistan and Iraq. Although these demonstrations were generally peaceful, some turned violent. Indonesia announced in November 2014, and implemented with efect from January 1, 2015, a ixed diesel subsidy of Rp1,000 per liter and scrapped the gasoline subsidy. Although the implementation did not result in any signiicant violence or political instability, the announcement and implementation also coincided with a period where crude oil prices had dropped very signiicantly from 2014. There can be no assurance that future increases in crude oil and fuel prices will not result in political and social instability. Separatist movements and clashes between religious and ethnic groups have also resulted in social and civil unrest in parts of Indonesia, such as Aceh in the past and in Papua currently, where there have been clashes between supporters of those separatist movements and the Indonesian military, including continued activity in Papua, by separatist rebels that has led to violent incidents. There have also been inter-ethnic conlicts, for example in Kalimantan, as well as inter-religious conlict such as in Maluku and Poso. Labor issues have also come to the fore in Indonesia. In 2003, the Government enacted a new labor law that gave employees greater protections. Occasional eforts to reduce these protections have prompted an upsurge in public protests as workers responded to policies that they deemed unfavorable. President Joko Widodo won the Indonesian presidential elections which took place in July 2014, and was sworn in as President of the Republic of Indonesia on October 20, 2014. Although the April 2009, July 2009 and July 2014 elections were conducted in a peaceful manner, President Joko Widodo’s governing coalition currently holds a minority of seats in parliament. In addition, the relatively closely fought 2014 presidential election, the challenge from the losing candidate in the 2014 election and the delay of the conclusion of the election result, as well as political campaigns in Indonesia, may be indicative of the degree of political and social division in Indonesia. There can be no assurance that social and civil disturbances will not occur in the future and on a wider scale, or that any such disturbances will not, directly or indirectly, materially and adversely afect our business, inancial condition, results of operations and prospects. Terrorist activities in Indonesia could destabilize Indonesia, which would adversely afect our business, inancial condition and results of operations, and the market price of our securities There have been a number of terrorist incidents in Indonesia, including the May 2005 bombing in Central Sulawesi, the Bali bombings in October 2002 and 2005 and the bombings at the JW Marriot and Ritz Carlton hotels in Jakarta in July 2009, which resulted in deaths and injuries. On January 14, 2016, several coordinated bombings and gun shootings occurred in Jalan Thamrin, Jakarta, resulting in a number of deaths and injuries. Although the Government has successfully countered some terrorist activities in recent years and arrested several of those suspected of being involved in these incidents, terrorist incidents may continue and, if serious or widespread, might have a material adverse efect on investment and conidence in, and the performance of, the Indonesian economy and may also have a material adverse efect on our business, inancial condition, results of operations and prospects and the market price of our securities.