Jakarta – PT Pertamina Hulu Indonesia (PHI) held Risk Management & ICoFR Awareness and ICoFR Implementation Kick-off, online, on Thursday (08/07). The event, attended by 120 participants, aimed to develop awareness and shared perception among PHI management regarding the urgency of Enterprise Risk Management (ERM) implementation as well as to introduce Internal Control over Financial Reporting (ICoFR) concept which is in line with ERM Implementation. President Director of PHI, Chalid Said Salim, and PHI management board also attended the event.
It was opened by Satya Nugraha and continued with a speech from PHI’s President Director.
In his speech, Chalid Said Salim urged all management personnel to have better understanding of risk management. “I hope that all management personnel at PHI can understand the concept of 3 Lines of Defense as well as how Risk Management and Internal Control can be implemented to realize Work Plan, Budgeting, and Program (RKSP) and to achieve On Time, On Budget, On Scope and On Return (OTOBOSOR) target on investment projects,” he said.
He also stressed that PHI management continues to be committed to risk management implementation. “I want all management personnel to commit, support, and actively participate as business process owner, risk owner, and control owner of business processes, so that risk management and ICoFR can work well,” he added.
The highly dynamic nature of the company’s business environment, both internal and external, necessitates the development of good culture of risk-awareness and internal control. PHI does that using the 3 Lines of Defense approach, in which there are three lines within the company with different responsibilities towards risk potentials in order to manage and mitigate risks well. The three lines are:
- The First Line, the frontline function that acts as business process owner, Risk Owner and control owner. Business process function is responsible for identifying risks and taking corrective actions to manage the risks.
- The Second Line, is a function that makes risk management policies and ensures that internal control has been implemented by the first line. The function guides the first line in identifying risk and planning mitigation efforts in accordance with existing rules and regulations. The Second Line also helps the management to consider all risks in decision making process.
- The Thirs Line, is an internal audit function that helps to ensure that everything is going well by providing monitoring and recommendations for improvement.
The basis for Risk Management implementation in Pertamina is Regulation of Ministry of State-Owned Enterprises No.PER-01/MBU/2011 concerning the Implementation of Good Governance in State-Owned Enterprises, particularly article 25 on fulfilling responsibilities of implementing Risk Management.
In implementing risk management, all management personnel at PHI have signed the Treaty of Commitment to Implement Risk Management & ICoFR on the second quarter (TW-II) of 2021, and have fully supported the Founding of Risk Management & ICoFR Committee and the Appointing of Risk Owner and Control Owner at all PHI’s functions as set forth in President Director’s Order No. Prin-040/PHI00000/2021-S0 dated 28 June 2021.
With the issuance of that order, Business Process Owner (1st Line of Defense) as Risk Owner and Control Owner is expected to be fully committed in identifying and mitigating risks in all investment projects and on-going business activities, in reporting the realization of risk mitigation and evidence in time, and in setting up discussion to determine risks activities and control.
At the end of the event, Vice President (VP) of Business Support, Satya Nugraha, urged that each function work together to achieve the company’s shared goals. “Implementation of Risk Management and Internal Control is expected to be a shared process which is designed and implemented to produce sufficient confidence in terms of compliance with existing laws and regulations, effective and efficient operational activities, and reliable Financial Reporting,” said Satya.
