PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2006 With Comparative Figures For 2005
Expressed in millions of Rupiah, unless otherwise stated
123
55. RISK MANAGEMENT
The Bank’s risk management is conducted based on Bank Indonesia’s Regulations regarding the Implementation of Risk Management for Commercial Banking No. 58PBI2003 dated May 19, 2003 and
Circular Letter No. 521DPNP dated September 29, 2003 regarding Implementation of Risk Management for Banks, and it is intended that the Bank can implement Basel II in 2008. The Bank is implementing
Basel II and related regulations in stages, starting with the standard model and then through the internal model approach which will be developed in accordance with the best practice standard, which is primarily
based on identification, risk measurement, risk monitoring and risk mitigation. For the 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 related Bank Indonesia’s Regulation and Circular Letter, the Bank prepares a quarterly
risk profile 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. Beside the Quarterly report
submitted 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 accurate.
In order to manage more complex risk and to meet the need of healthy and integrated bank management, the Bank has established Bank Mandiri Risk Management Policy KMRBM.
In accordance with Bank Indonesia regulation regarding Implementation of Risk Management for Commercial Banks, the Bank has 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 called Risk and Capital Committee RCC 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 to identify, measure and mitigate risk.
The scope of responsibility and function of the committee has undergone several changes. The latest changes which is 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 improvement, the scope of control and responsibility over each risk 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 that is under Risk Management Directorate. The Risk Management Directorate is responsible for 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
Year Ended December 31, 2006 With Comparative Figures For 2005
Expressed in millions of Rupiah, unless otherwise stated
124
55. RISK MANAGEMENT continued
