The Company realizes that as the business develops, the Company will be exposed to a number of business risks. Therefore, the Company sees it important to develop a risk management system in order to help it manage the risks and determine the mitigation steps. Risk management system of the Company consists of identification, evaluation, and risk controls potentially hampering the Company ’s operations, business continuity, and causing business failure.
In 2020, the Company identified a number of business risks, namely:
- Credit risk
Credit risk is the risk that counterparty will not meet its obligation under a financial instrument or customer contract, leading to a financial loss. There is no significant concentration of credit risk. The Company manages and controls credit risk by setting limit of acceptable risk for individual customers and monitors the exposure associated with these restrictions.
- Liquidity Risk
In managing liquidity risk, the Company monitors and maintains level of cash on hand and in banks deemed adequate to finance the operations of the Company to overcome the impact of fluctuations in cash flow. The Company also regularly evaluates cash flow projections and actual cash flows and continues to examine the condition of financial markets to take a fundraising initiative, which may include bank loans.
- Pandemic Risk
Pandemic risk is a risk that is beyond the Company’s capacity. Therefore, the Company responded to the situation by closely monitoring the impact of the pandemic to the operations and financial condition of the company and by taking careful decisions according to the business of the Company with respect to the business continuity aspect.
The Company is committed to taking proactive, effective and efficient measures against business risks by putting the Company’s business continuity as first priority. Every year, the Company will do evaluation upon the risk criteria to ensure the relevance.