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The role of the BOC and BOD in assuring sound internal control and risk…
The role of the BOC and BOD in assuring sound internal control and risk management system
Board of Director
Internal Controls
Regularly have to conduct reviews of the effectiveness of the company’s or group’s internal controls systems
Identifies formally in writing the type of decisions, which due to their legal, strategic, or functional
nature may not be taken without the express authorization of the Board of Directors;
Approve the Finance & Investment Policy to be presented for Shareholder approval at the
annual Shareholder Meeting
Ensure the existence at all times of the audit and financial risk committee & the safety, health and environmental committee
Controls a Code of Business Conduct for Members of the Board of Directors and
Company Employees
Risk Management
Ultimately responsible for ERM program
Approves risk appetite and risks tolerances
Approves risk catalog and assessment methods
Sets standards regarding risk policies and programs
Monitors the quality of the program
Board of Commissioners
Risk Management Committee
Examine and determine the sufficiency of the Company's internal processes for reporting on and managing key risk areas. To assess and recommend the Board acceptable levels of risk. To develop and implement a risk management framework and internal control system. To review the nature and level of insurance coverage
Audit Commmittee
Review the company’s internal financial controls and, unless expressly addressed by a separate board risk committee composed of independent directors, or by the board itself, to review the company’s internal control and risk management systems
Risk Monitoring Committee
Evaluate the risk management policies made & the suitability of the risk management policies and the implementation of the policies. Monitor and evaluate the implementation of the duties of the Risk Management Committee and the Risk Management Work Unit
Nomination and Remuneration Committee
Linking risk management with remuneration & nomination. More attention was being paid to this linkage, after a period in which remuneration schemes had been criticised for creating incentives to ignore or even increase risk in pursuit of short-term goals.
Others Committees
Evaluate the accountability of the BOD and provide direction & advisory for improvements to the implementation of risk management policies on a regular basis. Evaluations are carried out in order to ensure that the Directors manage activities and risks effectively.
GCG Committee
To evaluate the implementation of GCG in the Company. To make recommendations for GCG upgrading and implementation in the Company. To ensure that Company policies are in accord with Company culture, ethics, values and principles of GCG. To carry out other tasks given by the BOC related to the development and implementation of GCG.
Jiwasraya Case
Supporting Structure of BOC
Nomination, Remuneration and Governance Committee
Risk Oversight Committee
Audit Committee
Committees Under the BOD
Investment Committee
Product Development
Committee
Six Suspects
Ex-Finance Director, Hary Prasetyo
Ex-President Director, Hendrisman Rahim
President Commissioner of PT Trada Alam Minera (Tram) Heru Hidayat
Ex-Head of Investment and Finance Division, Syahmirwan
Managing Director of PT Hanson International, Benny Tjokrosaputro
Director of PT Maxima Integra, Joko Hartono Tirto
Failure to pay insurance policies because mismanagement of financial & investment management
It can be seen that Jiwasraya BOD & BOC doesn't play its role in assuring sound internal control and risk management system.
Risk Oversight Commitee & Audit Committee of Jiwasraya didnt their role well because they didn't evaluate & fix the implementation of the risk management policies,especially those related to liquidity and the amount of claims reserves
Investment Committee didn't carry out its duties properly because it invested customer money into high-risk shares & mutual funds
Jiwasraya didnt do the application of integrated GRC (Governance, Risk, Compliance) well
Product Development
Committee didn't carry out its duties properly because JS Saving Plan offer very high-interest rates that are not comparable with Jiwasraya’s capabilities
Three Lines of Defense
Enhance communications on risk management and control by clarifying essential roles and duties
BOD & BOC are considered to be among the three “lines” in this model.
They're the parties best positioned to help ensure that the Three Lines of Defense model is reflected in the organization’s risk management and control processes
Azka Hanna Husna (1806268370)
Cintya Evelyn M S S (1806268396)