Risk management is the process of identification, analysis, assessment, control, and avoidance, minimization, or elimination of unacceptable risks. An organization may use risk assumption, risk avoidance, risk retention, risk transfer, or any other strategy (or combination of strategies) to establish proper management and safeguard its capital and assets, hence to safeguard its existence and its future.
The Company’s risk can be categorized into 4 risk profiles:
1. Strategic Risk
Risks which are associated with potential losses arising from the provision and application of inappropriate strategies, inappropriate business decision making or failure to respond to changes in the pharmaceutical market.
- By involving all of the Company’s organizational instruments that have a strategic role, including the Board of Directors, the Board of Commissioners, the Company’s Committees – in addition to the Risk Management Team itself – to discuss strategies from various aspects, before decisions are taken and implemented;
- Evaluate in monthly, quarterly and mid-year time intervals after the strategy is implemented and make corrections and changes that are deemed appropriate to be taken and implemented.
2. Operational Risk
Risks that can result in failure and inefficiencies of the Company’s operations, including the risk of production failure due to improper product formulation, production machinery that is not operating smoothly and inadequate human resources. Besides the above factors, there are still marketing and sales risks.
- Always strive for strong R & D department and its team adequately equiped with up-to-date R & D tools to ensure that the formulated products can be produced smoothly, of good quality and to get the finished products with a maximum yield;
- Carry out maintenance of machines, timely replacement of spare parts and machinery regeneration continuously;
- Recruitment of employees through rigorous selection to get the right Human Resources for the appropriate fields of work;
- The Company always develop a marketing network with nationwide coverage with maximum market penetration consistently. In order to support marketing and sales activities, the Company always introduces new products that are suitable to the needs of the pharmaceutical market and prepares skilled and professional personnel through intensive and continuous training to succeed with such policy.
3. Financial Risk
Risks that potentially can cause losses due to fluctuations in the exchange rate of US Dollar and other strong foreign currencies against the Rupiah. Another financial risk includes an unbalanced capital structure.
- Almost all raw materials needed by the Company, where raw materials are still very dependent on importation, through agents in Indonesia so that the impact of fluctuations in the Rupiah exchange rate does not directly influence, because transactions are carried out in Rupiah;
- In terms of capital funding, prudence is the Company’s principle in borrowing money form the bank — by taking into account the needs of funds that have been carefully considered, and of not less importance, the ability to repay the loan.
4. Legal Risk
Legal risk is the potential risk Associated with laws, Government regulations and claim and/or demand raised by any third parties.
- The Company conducts its business in a very compliant manner with applicable laws and regulations issued by the competent authorities, namely the Health Ministry, the National Agency for Food and Drug Control (BPOM) and other authorities: the Ministry of Finance, the Ministry of Commerce and the Ministry of Manpower. Compliance is continuously and closely monitored by relevant departments under the coordination of the Corporate Secretary;
- The Company always applies precautiousness in its undertaking in order to avoid claims and/or demands from the third parties, especially on any third party Intellectual Property Rights by coordinating and consulting with the Directorate General of Intellectual Property Rights.