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PERISKOP Self Assessment Module
Loss Event Database Module Key Risk Indicator Module
Self Assessment SA is a series of activities conducted by each unit risk
owner in identifying operational risk issues
inherent in the unit, locate the cause, measure the loss potential
that may arise, and search for their solutions. The result of SA provides a
view of potential risks faced by the unit in the next 3 three months period.
Represents a database of all financial loss due to operational risk occurring
in all units of the Bank. In addition to improving the management of
operational risk, data of losses collected in LED also serve as basis for the
calculation of capital needed to cover operational risk using the Advance
Measurement Approach AMA. Key risk indicators are parameters
to identify the loss potential from operational risks inherent in products
and activities before the risk occurs, and to provide a signal if it crossed a pre-
determined range of values.
Business Continuity Management
Disruption or disaster caused by natural factors, human action, and system may happen to various
BNI’s critical business function, causing disruption of business activities and services by BNI.
To anticipate such events, BNI has implemented a Business Continuity Management BCM system
that is expected to be able to minimize operational risk in the event of an emergency or disaster
situation.
The development of the system is in line with Bank Indonesia regulation that requires banks to
implement risk control processes to manage risks that could compromise the survival of a bank, and
also in line with the requirements of the Basel II document which requires the Bank to have
business continuity management and contingency management plan to ensure the Bank’s ability to
keep operating and to limit losses in the event of disruption to business activities.
a. Governance and Organization In a disaster situation, BNI has prepared
a specific organization consisting of a Crisis Management Team CMT and an
Emergency Task Force ETF comprising of Senior Executives as disaster management
coordinator who has the highest level of authority and effective. The CMT is activated
as soon as the Executive Management Team EMT, as the highest authority in CMT,
declares a disaster condition. b. Policies Procedures
In regard the implementation of BCM, BNI has established:
- BCM policies for domestic operations
- BCM policies for overseas branches
- BCM procedures
- Governance of BCM Building
- Guidelines for visits to the BCM Building.
c. Process Every step of the recovery strategy and
restoration strategy implemented are monitored and reported to the CMT until the
return of normal conditions.
To ascertain the level of readiness and evaluation of BCM, BNI conduct disaster test
simulation to examine the implementation of BCM in all operational units. This is conducted
routinely every year to determine the level of readiness of each unit, in terms of organization
and infrastructure of its BCM. The results of the routine evaluation and examination are
evident in the systematic and purposeful handling of disaster situations, whether
caused by human, nature or systems. Thus, operational activities at disaster-affected
locations continue to a certain degree, even though some of its facilities and supporting
infrastructure are disrupted.
4. Liquidity Risk
Liquidity risk relates to the possibility that the bank is unable to meet its short-term obligations
to depositors, investors and creditors, as well as adequate levels of mandatory reserves, due
among other causes to limited access to financing or the inability to liquidate assets at a reasonable
price.
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Risk Management
Disclosure of Rupiah and foreign exchange maturity profiles - bank only and consolidated - is
presented in Table 9.1.a, Table 9.1.b, Table 9.2.a, and Table 9.2.b. The calculation of maturity profile
is in accordance with Bank Indonesia regulations and does not include the maturity profile of
subsidiaries in the insurance business.
One of the strengths of the BNI risk monitoring process is the availability of the Bank’s liquidity
profile information. The information is available in the Executive Information Management EIS
application, which can provide information on the progress of funds and loans on a daily basis,
giving the daily cash flow profile and the monthly maturity profile that can be used as a system for
monitoring and managing liquidity risk.
Early Warning Indicators Early warning indicators are outlined in the
Secondary Reserve indicators in normal, and moderate or tight conditions for Rupiah and
foreign currencies, such as the trend rate of market interest rates, foreign exchange reserves,
and third-party funds including those of dominant depositors. Each indicator is equipped with limits
as a reference for the determination of normal, moderate or tight liquidity conditions.
Determination of SR in moderate or tight conditions is made by the Enterprise Risk
Management Division based on established indicators. Following this, a moderate or tight
Liquidity Contingency Plan LCP SR Ideal will be imposed.
The above indicators are regularly reviewed in line with the development of the external and internal
condition triggered by economic development at national, regional, and global levels.
5. Legal Risk
Governance and Organization
Legal risk management is conducted by the Legal Division, under the active supervision of the
Director of Legal and Compliance.
The Legal Division collaborates with the respective Legal Unit or Legal Staff in the various
DivisionsDepartmentUnitRegional Area or other Liquidity risk management aims to minimize the
possibility of the Bank’s inability to obtain sources of financing of cash flow, and to build a strong
structural liquidity of the Bank’s balance sheet to support long-term sustainable growth.
Governance and Organization Liquidity Risk management is conducted by the
Enterprise Risk Management ERM Division and the Treasury TRS Division. The ERM Division
prepares the policies and procedures for liquidity risk management, which are then implemented
by the TRS Division through its liquidity strategies. The ERM Division also monitors the
implementation of liquidity management by the TRS Division.
Policies and Procedures The Enterprise Risk Management Division
prepares the Liquidity Risk Management Policy in the form of Liquidity Risk Management
Guidelines, which is further described in the Standard Operating Procedure manual for liquidity
risk management practices, which include: a. Liquid Instrument Availability: Statutory
Reserve, Secondary Reserve, Early Warning Indicators, etc.
b. Measurement of Liquidity Risk: Liquidity Ratio, Cash Flow Projection, Maturity Profile, Stress
testing, etc. c. Monitoring
d. Controlling e. Liquidity Limits setting
Process
In addition to maintaining and sustaining the Primary Reserves, BNI also keeps and maintains
Secondary Reserves to ensure liquidity is at a safe level. As a backup for Secondary Reserves,
BNI keeps and maintains Tertiary Reserves. Setting and monitoring of limits, namely the
Secondary Reserve Ideal Ideal SR limit and on-shore loan limit is conducted periodically by
the ERM Division. While the availability of the whole reserves are monitored on a daily, weekly,
and monthly basis by the TRS Division and ERM Division.
Tools and Methods
In managing liquidity risk, BNI uses the daily cash flow projections and monthly maturity profile, both
contractual and behavioral, in order to establish the appropriate and accurate strategies to
anticipate liquidity conditions in the future.
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organizational units, serving as a ‘legal watch’, which provides analysislegal advice to all working
unit at every level of the organization.
In the case of a new productactivity launch, the Legal Division conducts a legal analysis procedure
to the new productactivity in collaboration with Enterprise Risk Management Division and related
divisions as the Risk Control Unit. This is done to assess the impact of such new productsactivities
in terms of Legal Risk exposure and recommend risk mitigation.
In addition, the Legal Division collaborates with the Enterprise Risk Management
Division to periodically assess and monitor the implementation of legal risk management.
Policies and Procedures
Implementation of legal risk management refers to the Legal Risk Management Guidelines and
other relevant policies and procedures.
Periodically, the Legal Division also performs the evaluation and updating of various policies in legal
andor legal risk mitigation in accordance with external andor internal developments.
Process
The process for legal risk management involves appraisalassessment in the form of judicial
reviews on new products and activities or on additionschanges to existing product features
and activities, as well as legal advice andor legal assistance related to the operational activities of
the DivisionUnitProjectBranchLoan Centers.
Request for legal advice andor legal representation is handled in accordance with the
authority of the Legal Division as follows: a. BranchLoan Centers and other unit at
Regional Area level submits request for legal advise to the Legal Unit in the Region Legal
Region; b. DivisionTask Force UnitProject and other
units at the same level submit the request for legal advise to the Legal Division.
In implementing Legal Risk management, the Legal Division conduct periodic reviews of the
contracts and agreements between the Bank and other parties, in particular for non-standard
agreements or agreements that have not been codified in the Company Guidelines.
6. Strategic Risk
