Risk Management

The Company has put in place a comprehensive and rigorous system for managing risk that is designed to safeguard the achievement of the Company’s strategic objectives, grow profitability and assure the sustainability of the business.

Risk Management Policy

As one of the leading retailer in Indonesia, Matahari keeps expanding its business and has been developing and applying comprehensive risk management policies.

This policy is aimed to control all the potential risks that might happen as well as affect the process of achieving the Company’s strategic goals and to guarantee the sustainability of the growing business. This policy is designed by involving the whole component in the Company to give their contributions and actively participate in controlling the risk.

Board of Directors, Management, Risk Management Committee and other relevant managerial position, has the main responsibility to:
• Identify
• Analyze
• Control and manage the risks

However, the Company believes that instilling the risk awareness (risk culture) to the whole organizations is very important, and therefore, all of the stakeholders have their role to ensure that all of the risks have been identified, anticipated, monitored, and handled effectively.

Company’s approach towards the risk management is defined in the Enterprise Risk Management Framework, which delivered the objective, strategies and governance, methodology, monitoring process and the report of risk management.

The main components of the Framework are:

Risk identification, including risk awareness, measurement, monitoring and controlling;
Risk management infrastructure, including organization structure, governance system, data collection, method of analysis, principles, procedure and reporting; and
Corporate culture, including training, working measurement, score development and awards.
With this framework, the Company is able to identify and handle the risks preventively and proactively in all of the strategic areas.

In the main process of risk control, the Company has implemented Risk Control Self-Assessment (RCSA) to the whole business process in the Company by identifying potential risk, assessing and measuring the risk as well as controlling risk by implementing strategies to mitigate the potential disadvantage in operational, financial, business and reputation. This process of risk control is executed periodically and reported to the Management and the Audit Committee.

The Company establishes Risk Management Committee to strengthen monitoring and controlling of risk management process. The duties and responsibilities is as stated in the Risk Management Committee Charter which is developing, implementing and managing the strategy to minimalize the Company risk.

The members of Risk Management Committee are:
• Chief Executive Officer
• Chief Financial Officer
• HR Director
• Store Operations Director
• Head of Risk Management & Audit Internal

This committee conducted the meeting periodically to ensure the Company risk control has been implemented properly.

The Company is exposed to risks that are common to all businesses, including those related to political and economic conditions, competition, environmental impact and health and safety at work. Due to the nature of its operations the Company is also exposed to additional risks that are specific to the modern retail business, including security risks. To mitigate such risks, the Company has installed an advanced Electronic Article Surveillance system, which includes Closed Circuit Television (CCTV) to support the work of the Company’s security staff.

The Company is taking aggressive measures to embed a risk awareness culture throughout the organisation by
training store operation teams and other divisions at head office, running communication campaigns and distributing a newsletter to all business process owners (divisions and departments) to share information on significant risks and advice on relevant mitigating measures.

In 2015 the Company embarked on the latest phase of the Managing Risk Project, a re-assessment of the entire business cycle to ensure that risks are identified and mitigation plans executed effectively. This will take place every two years.