Liquidity Risk Operational Risk Legal Risk

Annual Report 2013 PT Bank Mandiri Persero Tbk.

3. Liquidity Risk

With reference to Bank Indonesia regulation, liquidity risk is deined as follows: “Liquidity Risk is the Risk which is caused by Bank’s inability to meet its obligation from cash flow funding sources andor the high quality liquid asset which can be pledged, without disturbing the activity and inancial condition of the Bank” 1125PBI2009. The Bank’s liquidity is inluenced by the funding structure, asset liquidity, liabilities to counterparty and loan commitment to debtors. Bank Mandiri measures the liquidity ratio using 2 two ratio approaches, namely Nominal Stock Based and Flow Based.

4. Operational Risk

With reference to Bank Indonesia regulation, operational risk is deined as follows: “Operational Risk is the Risk which is caused by the inadequacy andor non-functioning internal process, human error, system failure, andor external events which influence Bank’s operational” 1125PBI2009. The operational risk management is intended to reduce losses due to non-functioning internal process, human error, system failure, or external factors which inluence Bank’s operation. The Bank conducts efective operational risk management to reduce losses due to operational risk. Frameworks for Operational Risk Management ORM are based on Bank Indonesia regulations and Basel II and the provisions of the Bank’s internal regulations. At this time, the Bank has an ORM risk management policy namely Mandiri Risk Management Policy KMRBM, and Standard Operating Procedures SOPs, which contains technical operational risk management in terms of governance, procedure and reporting systems aspects. The Bank also establishes procedures for risk management and mitigation steps on New Products and Activities PAB namely SPO PAB containing assessment methodologies on 8 eight types of risk.

5. Legal Risk

With reference to Bank Indonesia regulation, legal risk is deined as follows: “Legal Risk is Risk that happened because of legal claim andor weakness of jurisdiction aspect” source: 1125 PBI2009 Legal risk may happen in all transaction aspects of Bank Mandiri, including contracts executed with the customers and other parties and may have impact on other risks such as compliance risk, market risk, reputational risk and liquidity risk.

6. Strategic Risk