The Company always strives to prevent the occurrence of various risks and their consequences through a risk management system. To carry out risk management, the Company first identifies, classifies and mitigates through conducting surveys, interviews, analyzing historical data and contributing suggestions from employees.
The Company is committed to reviewing the risk management system that is implemented to remain in accordance with current conditions to avoid loss to the Company. The implementation of the Company’s Risk Management System in 2018 is carried out by the Director of Risk Management which is filled by the Independent Director of the Company.
Types of Risk and How to Manage it
Like other business sectors, the Company’s business sector is also inseparable from challenges and risks both from outside and internally the Company. The following are risks that are expected to affect the Company’s business in general, based on the risk weights faced:
- Risk of natural gas prices
The ceramics industry in Indonesia has a certain level of vulnerability to commodity price fluctuations, especially fluctuations in the price of natural gas where natural gas is the main energy source for the ceramic industry. Natural gas is the main energy source, and the risk of disruption of gas supply can hamper the smooth production. Non-current production can not only cause delays or cancellations of product deliveries to customers, but will also have a negative impact on financial performance. The efforts made by the Company are by seeking medium-long term contracts with suppliers. These fluctuations are a factor which at any time can change the calculation of production costs.
- Risk of competition
The porcelain tile business that the Company operates has bright prospects. Competition is always tight with aggressive marketing activities carried out by players in this industry. High market dynamics require the Company’s readiness to respond to market demand by providing better value to consumers compared to its competitors.
- Risk of procurement of raw materials
The contribution of imported raw materials is still quite large, and quite significant from the overall raw material costs. The delays in procuring key raw materials from overseas suppliers can disrupt the Company’s production processes and operations. To anticipate this problem the Company seeks to find raw materials from local sources.
Review of the Effectiveness of the Company's Risk Management System
The Board of Directors conducts periodic assessments of the effectiveness of the implementation of Risk Management by assessing aspects of the internal work environment, targeting, identification of events, risk assessment, response to risks, control activities, information and communication, monitoring and continuity of operational activities.
The results of the Directors’ Evaluation of Risk Management will be used to improve Enterprise Risk Governance (both the Risk Management framework and process), which is reviewed annually by the Company.