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INTP:IJ Rp. 12,450 altimage 2.68%
22-Oct-2020 15:47
altimage
INTP:IJ Rp. 12450 altimage 2.68%
22-Oct-2020 15:47

Compliance Function

Indocement’s Compliance Function is one of the key drivers to the Company’s performance achievements. This function monitors policies, stipulations, and Indocement’s activities, ensuring alignment with prevailing regulations. Through planned and integrated compliance programs, Indocement is committed to develop a compliance culture, and to continue fostering effective risk management efforts.

Compliance Function Organization Structure
Indocement’s Compliance function is under the Corporate Secretary.

Based on Indocement’s code of conduct, every line manager must understand and comply with all applicable rules and regulations.

Code of Conduct
Indocement owns a code of conduct which has been implemented since 2003 and renewed if necessary. This code of conduct is socialized to all employees and signed by all Indocement employees’ Indocement to be obeyed and implemented.

Guidelines
In addition to the code of conduct, the Company also has certain guidelines that are considered necessary to be obeyed and implemented by all employees, among others:
• Anti-Corruption Guidelines
• Anti-Monopoly Guidelines
• Trade Sanction Guidelines
• Social Media Guidelines

Compliance Function 2015 Program
In order to manage compliance risk, during 2015 Indocement conducted training on compliance, reviewing and disseminating new rules and regulations and several law-related programs.

RISK MANAGEMENT
External and internal conditions can affect the development of the Company's operations as well as increase the level of complexity of the risks faced by the Company. The increasing complexity of risk needs to be balanced by the application of risk management including identification, measurement, monitoring, and controlling risks. Risk Management is a set of procedures and methodologies used to identify, measure, monitor, and control the risks arising from the Company's business activities.

Risk Management System

The Company is committed to implementing risk management for various types of risks such as operating risk, financial risk, strategic risk, and the risk of safety, health, and environment. 

Risk control is carried out by identifying and evaluating the key risks faced by the Company, determining the strategy and mitigating controls to manage risks, and assessing the continued risk after risk control has been completed.

In carrying out the Company's operations, risks are carefully regulated to avoid potential losses to the Company.

The Company also constantly reminds employees about risk awareness so that they can contribute to risk management and provide important input in decision making. Thus, management and all employees are committed to implementing risk management.

The Company’s Risk Management is handled by the Internal Audit Division.

Risk Management System Effectiveness Evaluation
Indocement’s the Board of Commissioners has an obligation to oversee the risk management activities conducted by the Company and conducts regular assessments and evaluations of the effectiveness of the risk management controls and provides recommendations if deemed necessary. However, the authority for the implementation and management of the Risk Management framework has been given to the Board of Directors with the Internal Audit Division being responsible of risk management in Indocement.

Risk management has contributed positively in the process of planning, decision-making, and strengthening the implementation of GCG in Indocement. The risk management system applied by the Company was able to minimize or suppress the possibility of risk happening.

Implementation of a comprehensive risk management system enabled the Company to effectively manage risk exposure in order to estimate the risk portfolio and to take preventive measures and to maximize profits.

Risk Identification and Risk Management Efforts

The Company continuously evaluates the business environment to be able to identify and quantify the level of risk. As a company engaged in the field of cement, Indocement classifies risks it faces as follows:

a. Market Risk
    Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company’s operation is exposed to market risks, in particular, foreign currency risk and commodity price risk.

b. Foreign Currency Risk
    Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The exposure to foreign exchange rate changes relates primarily to the Company’s operations when expenses are denominated in currencies other than Rupiah, mainly United States Dollar. To minimize the risk arising from foreign currency fluctuations, the Company has taken the stand to purchase its currency needs in advance where it is deemed beneficial. This strategy depends on current and future market forecasts.

c. Commodity Price Risk
    Commodity price risk happens primarily due to the purchase of gypsum, coal and other fuels. Commodity price fluctuations, foreign exchange rates and the level of demand and supply in the market directly affect the risk. To minimize commodity price risk, the Company maintains inventory level of gypsum, coal and other fuels to ensure continuous production.

d. Credit Risk
    Credit risk is the risk that appears if the Company incurs a loss arising from its customers’ or counterparties’ failure to fulfill their contractual obligations. Credit risk arises mainly from trade receivables from customers relating to sale of cement and RMC products. To mitigate this risk, the Company has policies in place to ensure that sales of products are made only to credit worthy customers.

Credit risk can also appear through losses resulting from the Company’s banks failing and its deposits being lost. The Company minimizes credit risk on its cash in banks and cash equivalents by selecting reputable banks for the placement of its funds.

e. Liquidity Risk
    Liquidity risk is the risk that may occur if the company is unable to finance its capital expenditure and service its maturing debts. The Company manages its liquidity risk by maintaining sufficient cash and cash equivalents, after a thorough financial projection analysis at the beginning of the year.

f. Safety Risk
   Safety risk is the risk that may occur if the Company’s employees are harmed or suffer adverse health effects and are unable to continue working. The Company manages its safety risk through implementing rigorous safety standards, safety training, constant monitoring and follow-up of any incidents that may occur. Lost time statistics are maintained and closely monitored. There is a Safety Committee at top management level that overseas this area. Safety awareness programs have now been rolled out to include all employees, contractors and the communities surrounding the Company’s factories.

Indocement, a producer of Semen Tiga Roda Cement and Semen Rajawali