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
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56. RISK MANAGEMENT
The Bank’s risk management implementation is not only based on Bank Indonesia’s Regulations regarding the Implementation of Risk Management for Commercial Banking No. 58PBI2003 dated May
19, 2003 and Bank Indonesia’s Circular Letter No. 521DPNP dated September 29, 2003 regarding Implementation of Risk Management for Banks, it is also intended that the Bank can implement Basel II
Accord in 2008. Basel II Implementation in the Bank is started with the standard model and then will move to the internal model approach which that will be developed in accordance with the international best
practice, that based on risk identification, risk measurement, risk monitoring and risk mitigation. For implementation, the Bank has established a Basel II Compliance Committee, the purpose is to
integrate all initiatives related to risk management, such as:
• Identify PT Bank Mandiri Persero Tbk. position with the Basel II regulation gap analysis. • Prepare the strategy and implementation of integrated Risk Management.
• Integrate the above steps with the infrastructure preparation including the information technology with Enterprise Risk Management ERM Project 2005 - 2008.
To comply with the Regulator, the Bank prepares a risk profile quarterly and reports to Bank Indonesia as scheduled. The risk profile report describes the inherent risk in the Bank’s business activities including the
risk control system for each risk. Besides quarterly report to Bank Indonesia, the Bank internally attempts to evaluate risk profile in shorter period such as monthly, weekly and daily, in order to detect risk performance
earlier and more accurately. In order to manage more complex risks and to meet the need to manage a healthy and integrated bank,
the Bank has Bank Mandiri Risk Management Policy. In accordance with Bank Indonesia regulation regarding Implementation of Risk Management for
Commercial Banks, the Bank has a established Risk Management Committee and Risk Management Unit which are intended to support the Bank-wide, integrated, measurable and controlled risk management.
The Risk Management Committee in Bank Mandiri is called Risk and Capital Committee RCC which was established on October 10, 2001. RCC is responsible for establishing Bank-wide risk management
policies, such as reviewing internal limits, establishing funding and loan related interest rate policies, loan policies, new product launching and monitoring the implementation of established policies and procedures
for risk identification, measurement and mitigation. The scope of responsibility and function of the committee has undergone several changes. The latest
changes which started to be implemented in the first half year of 2006 is to focus the RCC into three sub committees, which are: Asset Liability Committee, Risk Management Committee and Capital
Investment Committee. With the related improvement, the scope of control and responsibility over risks has become more focused and more effective. Each committee is supported by working group whose
members are consisting of groups directly related to the risk problems included in the committees scope. The Bank has established an organizational structure that is able to support risk management in a more
comprehensive, centralized, measurable and controllable way, by establishing the Risk Management Working Unit which is also referred to as the Risk Management Directorate. The Risk Management
Directorate is responsible in managingcoordinating all risks encountered by the Bank, such as credit risk, market risk, operational risk, liquidity risk, legal risk, reputation risk, strategic risk and compliance risk,
including defining risk management guidance and policies.
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
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56. RISK MANAGEMENT continued
