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Organization and risk management functions

The bank’s board has an obligation to create an organizational structure to manage the bank’s risk, including risk management committee and risk management unit. Membership of the risk management committee should consist of a majority of the board of directors together with the appropriate executive officers.

Risk management committee should provide recommendations to the Director of the following issues:

• policies, strategies, and implementation of risk management;

• Any process of change caused by the internal audit recommendations or other evaluation of the risk management process;

• Explain to Bank Indonesia and the board of directors, according to decisions made by banks that are not in accordance with risk management policies made late;

Management unit structure

Requirements for the structure of risk management units are:

• Must be sufficient to control the size and complexity of the risk that the bank will be taken;

• It has operational independence and reporting of business units,

• Report to the members of the board of directors (Chief Risk Officer)

Risk management unit should be responsible for:

• Monitoring the implementation of risk management strategy approved by the board of directors of banks and BI;

• Memonitori all levels of risk to be taken by the bank and compared with the overall banking risk appetite (as approved by the board of directors and BI);

• Memonitori level of risk banks take risks than the limit set for each type of risk;

• Melaksnakan stress tests;

• Conduct periodic review of procedures and the bank’s risk management processes (such as credit purchase process, and others);

• Testing proposals of new products and services;

• Conduct periodic testing of the predictive ability of risk models (eg, the realization of bad debts compared to predictions generated by the model)

• Make recommendations to the risk management committee on all aspects of risk management processes;

• To report regularly to the bank’s risk profile leader in risk management unit and the risk management committee.

Operational risk management unit

Bank’s operational units must report the full risk exposure to the risk management unit periodically.

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