Enterprise Risk Management Solution

A member firm of APB A member firm of APB GroupGroup

APB IndonesiaAPB IndonesiaAPB IndonesiaAPB IndonesiaGovernance - Risk Advisory & Solutions

Proposal to Assist Bank Proposal to Assist Bank Eksekutif inEksekutif inCredit & Operational Risk Credit & Operational Risk Management ImplementationManagement Implementation

Proposal to Assist Bank Proposal to Assist Bank Eksekutif inEksekutif inCredit & Operational Risk Credit & Operational Risk Management ImplementationManagement ImplementationBank Eksekutif Tbk.

August 2008

APB Indonesia Competency Statement a member firm of APB Group APB Indonesia Competency Statement a member firm of APB Group

Contents

Executive Summary

Background: Why Implement Risk Management Bank Eksekutif in Our Perspective

Approach & Methodology Wave 1: August – end of December 2008 Wave 2: 2009 Wave 3: Further Enhancement Phase (Start from 2010)

Final Deliverables

Working Schedule (Wave 1: August – end of December 2008)

Our Value Propositions

Our Services & Solutions


Executive SummaryExecutive Summary


Designed specifically to meet the needs of Bank Eksekutif Consist of modular and practical methodologies, tools and reporting Enable the Bank to manage its Credit, and Operational Risks (including Legal, Reputation, Strategic and

Compliance risks) User friendly and easy to use Provided necessary training and “train the trainer” trainingThe commitment of the Bank Eksekutif’s Board of Commissioners (BOC) and Board of Directors (BOD) is a

mandatory to ensure this project is given its due importance and for its success. Our consultants will work side by side with the Bank’s RMU and other required counterparts There will be an effective transfer of knowledge and technology to the RMU and relevant business unitsComply with Bank Indonesia’s and BIS risk management guidelines and regulations

Designed specifically to meet the needs of Bank Eksekutif Consist of modular and practical methodologies, tools and reporting Enable the Bank to manage its Credit, and Operational Risks (including Legal, Reputation, Strategic and

Compliance risks) User friendly and easy to use Provided necessary training and “train the trainer” trainingThe commitment of the Bank Eksekutif’s Board of Commissioners (BOC) and Board of Directors (BOD) is a

mandatory to ensure this project is given its due importance and for its success. Our consultants will work side by side with the Bank’s RMU and other required counterparts There will be an effective transfer of knowledge and technology to the RMU and relevant business unitsComply with Bank Indonesia’s and BIS risk management guidelines and regulations

Executive Summary


Background: Why Implement Risk ManagementBackground: Why Implement Risk Management


Why Implement Risk Management-Two Reasons Why Indonesian Banking Implement Risk Management-

Create Economic Value of the Firm

Rugulatory Requirement of BI

2 Reasons


1. Create Economic Value of the Firm :

“To achieve better return & equityachieve better return & equity, risk should be controlled more effectively.”

J.P. Morgan Chase (Annual Report 2001)

“Risk is an integral part integral part of all our activities. Excellence in Risk Management and Control is a key success factor key success factor and therefore requires everyone’s commitment within our organization.”

Union Bank of Switzerland (Annual Report 2001)

“To enable ANZ business units meeting their performance, growth & breakout objectives, the identification and effective management of risk is essentialessential as it is considered as a strategic asset and a source of competitive strategic asset and a source of competitive advantageadvantage.”

ANZ Bank (Annual Report 2001)

Why Implement Risk Management-Create Economic Value of the Firm-


2. Regulatory Requirements of Bank Indonesia (BI):

BI Regulations :

No. 5/8/PBI/2003 -RM implementation in the Banks

No. 9/13/PBI/2007 -Minimum Capital Adequacy Requirement for Market Risk

Management

No. 9/15/PBI/2007 -IT in Risk Management Implementation Other BI Regulations related to Risk Management Implementation:

No. 8/4/PBI/2006 &

No. 8/14/PBI/2006 - Good Corporate Governance BI Guidelines (Circular Letter):

No. 5/21/DPNP - RM implementation in the Banks

No. 5/22/DPNP - Standard Guidelines of Internal Control System

No. 9/31/DPNP/07 - Internal Model Calculation of Minimum Capital Adequacy

Requirement for Market Risk Management

No. 9/33/DPNP/07 -Standardized Model Calculation fo Minimum Capital

Adequacy Requirement for Market Risk Management

NOTES:

BI Regulations’ Minimum Capital Adequacy Requirement for Credit Risk Management (Standardized Approach) & Operational Risk Management (Basic Indicator) will be released around August or September 2008.

Why Implement Risk Management-Regulatory Requirements of Bank Indonesia-


Why Implement Risk Management-Basel 2 Implementation Roadmap in Indonesia & South East Asia Counties-

2007 2008 2009 2010 2011

Q1 2009SA-CR

BIA

Q4 2010IRB

SA-OR

Q2 2011:AMA

Q4 2009SA-CR,FIRBBIA,SA-OR

Q4 2010AIRB

Q4 2007SA-CR

BIA,SA-OR

Q4 2009AIRB

Q4 2007SA-CR,FIRB,AIRBBIA,SA-OR,AMA

Q2 2007SA-CR

BIA,SA-OR

Q4 2009FIRB,AIRBAMA


Background: Bank Eksekutif in Our PerspectiveBackground: Bank Eksekutif in Our Perspective


Established in 1992, PT. Bank Eksekutif Internasional, Tbk (Bank Eksekutif) to date has 19 operational offices providing services to its clients in Java, Sumatera, Bali and Sulawesi. Aiming its vision ‘To be the Bank of Choice in retail financing, valued for its business innovation & national network‘ through corporate values: integrity, eficiency, responsibility, fighter spirit & teamwork and motto/strategy: speed, service and solution, Bank Eksekutif focuses its services in providing retail credit to its customer, especially through otomotive leasing industry and now also expands to apartment developer credit.

Acknowledge the implementation roadmap of BI’s Basel 2 accords in Indonesia and support the pillars of Arsitektur Perbankan Indonesia, Bank Eksekutif as part of Indonesian banking industry has to comply with BI regulations that banks have to implement risk management to ensure that risks faced by the bank are being managed efectively and the bank has to provide adequate capital to cover each type of risks they are dealing with. On the other hand, as public listed bank (22 % of shares owned by public), Bank Eksekutif also has an obligation to disclose it reports to the public which includes the risk-based financial report that shows how effective the bank manage its risks. In addition, continually expanding its business, Bank Eksekutif wishes to have an effective risk management within the company to ensure that the opportunities are being exploited optimally and the risks which can implicate the adverse effects to their objectives are being managed properly. Prior to those matters above, Bank Eksekutif wants to make sure that they have sufficient capability to put their risk management in place and in line with the BI regulatory requirements.

Bank Eksekutif in Our Persepctive


Approach & MethodologyApproach & Methodology


Approach & Methodology-Proposed Approach & Methodology in Assisting

Bank Eksekutif’s Credit & Operational Risk Management Implementation-

Wave 1

Wave 2

Wave 3


Approach & Methodology-Wave 1: August – End of December 2008-


Approach & Methodology-Wave 2: 2009-


Approach & Methodology-Wave 3: Further Enhancement Phase (Start from 2010)-


Final DeliverablesFinal Deliverables


Final Deliverables-Deliverables at the End of Wave 3-


Final Deliverables-Bank-wide Risk Management Warehouse-


Final Deliverables-Bank-wide Risk Management Report Samples-


Working Schedule & Deliverables(Wave 1: August – End of December 2008)Working Schedule & Deliverables(Wave 1: August – End of December 2008)


Working Schedule & Deliverables-Wave 1: August – End of December 2008-

NOTE: Phase 2 & 3 are conducted in parallel (Phase 3 may start 3 weeks after phase 2 roll-out)


Our Value PropositionsOur Value Propositions


As a group of governance and risk management professionals, we would like to partner Bank Eksekutif in establishing the ERM fundamentals and implementation of Banking Credit and Operational Risk Management which include:

•Socialization and Internalization of concept, principles and ERM framework to all respective responsible officers which assure there will be an effective transfer of knowledge process.

•Implementation of Banking Credit and Operational Risk Management which comply with BI regulations and guidelines of Indonesian Basel 2 implementation roadmap, from the start of basic implementation stage like Boards’ Breifing to define the Bank’s Risk Philosophy, Appetite & Tolerance, up to the advancement level of further development such as, the implementation of Minimum Capital Adequacy modelling, Business Continuity Management and the development of Disaster Recovery Center.

•Assessment, assistance and implementation of Credit & Operational Risk Management software or solutions wich provide an user-friendly and easy-to-use tool to strengthen the Bank’s Risk Management Infrastructure and provide intuitive and timely necessary information needed in the Bank’s decision making process.

Our Value Propositions


Our Services & SolutionsOur Services & Solutions


Our Services & Solutions

Our company in Indonesia – APB Indonesia – was established to assist our client in solving their risk management challenges, leveraging to the most optimum level that it is feasible within the perspective of Good Corporate Governance and company’s performance ultimate objective: Value of the firm.

Our company is a member firm of APB Group as integrated consulting services provider ranging from Public/Corporate Governance advisories, legal risk advisories, enterprise risk management advisories and solutions, strategic management advisories, human resources consulting, tax consulting, CSR advisories, business and financial re-engineering advisories and professional certification training up to knowledge and general management consulting.

Our aim is to become your adding value partner through our beliefs and values: commitment, proficiency and trustworthy. We believe that our clients deserve for the excellent services.


Our Services & Solutions-Governance Advisories-

Self-Assessment

Corporate Code of Conduct

Boards’ Manual

Strategic Reporting

Sustainability Reporting

Governance Advisories We provide GCG Advisory Services which cover full-range of company’s GCG implementation, starting from assessment, conduct gap analysis, measure the magnitude of company’s governance practices, develop corporate code of conduct and boards’ manual, up to the deployment of corporate strategic reporting, which includes a.o. GCG, ERM and Sustainability reporting.


Pre-Assessment

Assessment

Implementation

Post Implementation

Risk Management Advisories

Our Risk Management Advisory Services cover from the basic level of advisories e.g. building the risk governance framework, up to the most advance stages such as establishment of BCP (Business Continuity Plan), DRC (Disaster Recovery Center), and the likes. We also assist client in building their control self-assessment to accelerate risk management implementation.Basic Moderate Advance

Our Services & Solutions-Risk Management Advisories-


Our Services & Solutions-Risk Management Solutions-

Credit Risk Management

Market Risk Management

Operational Risk Management

iRisQ

iRisQ

Comply with Bank Indonesia’s and BIS 2 risk management guidelines and regulations


iRisQ is an enterprise risk management software for corporation in financial institution and real sector company build from ground up using first hand consulting experience to cater operational risk management needs of your company.

iRisQ is a key building block in implementing an enterprise-wide, integrated approach to risk and compliance management. iRisQ delivers a policy-driven, process-centric way to manage risk through self-assessments, end-user surveys, automated workflow and executive dashboards that provide management with the visibility, control and decision support required to understand and manage risks throughout the organization to optimize business performance



COMPASS is an integrated multi-user Treasury/Portfolio Management System for the administration of all treasury financial products in a Treasury/Asset Management Operations. It is designed on a layering concept that provides enhanced functionality and process integration that allows an integrated flow of trades, exceptions management, and maintaining the data integrity from Front-, Middle- to Back-Office of Treasury/Asset Management operations and equipped with Market Risk Management functions.



Our Services & Solutions-Strategic Management Advisories-

Corporate Benchmarking

Strategic HR Management

Corporate Financial Re-engineering

Performance Management System

Turn-around and Change Management

Strategic Management Advisories In Strategic Management area, we

provide our Strategic Management Advisory Services which cover company’s specific needs e.g. corporate / industrial benchmarking initiatives, HR & Financial Strategic Management, Performance Management System, Turn-around and Change Management etc.

In particular, we also help company to do the IPO (Initial Public Offering) and migrate to be ‘Bank Devisa’.


Coordinating Ministry for Economic AffairMinistry of State-Owned Enterprise

Our Services & Solutions-Some of APB Group Corporate Clients-


Dapen Perkebunan Dapen Telkom Dapen PLN Dapen Pertamina

Our Services & Solutions-Some of Individual Consultants’ Exposures-


• Mr. Prof. Dr. Mas’ud M : Banking and Infrastructure Industry

• Mr. F. Antonius Alijoyo : Banking Industry and Real Sector Companies

• Mr. Indra Safitri : Public Listed Companies

• Ms. Srie Urip : Real Sector Companies

• Ms. Meuthia Gani e-Rochman : Real Sector Companies

• Mr. Martiono Hadianto : Energy (Oil & Gas) and Mining Industry

• Mr. Jeffry Cheah : Banking, Insurance, and Pension Fund Industry

• Mr. William Lim : Banking, Insurance, and Pension Fund Industry

• Mr. Prof. Martin Loosemore. Ph.D : Public Sector Organizations and Infrastructure Industry

• Mr. Bede Boyle : Energy (Oil & Gas) and Mining Industry

• Mr. Jim Laird : Process- & Project-based Companies and Mining Industry

Our Services & Solutions-APB Group Subject Matter Expert / Advisory Board-


Prof. Dr. Mas’ud Machfoedz, MBA is a leading academician, consultant and practitioner in Finance, Accounting, Corporate Governance and High Level of Banking Risk Management. Currently he is a professor in Gadjah Mada University, and the chairman of the Advisory Board of APB Group.

Indra Safitri is a leading Capital Market legal consultant and practitioner, a board member of IKAI (Ikatan Komite Audit Indonesia) and a member of the advisory board of APB Group. He is also a board member in several prominent non governmental organizations in the field of legal advisories.

Sri Urip is a well recognised figure and leading practitioner in large corporations. In the field of CSR, she has been practitioner at its best, originator of integrated Nation-SR (Nation Social Responsibility) framework.

F. Antonius Alijoyo is a leading consultant in Corporate Governance and Enterprise Risk Management (ERM). Currently he is the Asia Pacific Group Director of PRMIA (Professional Risk Managers’ International Association), a member of National Committee on Governance, and a member of the advisory board of APB Group.

Martiono Hadianto is an experience practitioners for more than 30 years in Strategic and Turnaround Management for State-Owned Enterprises. Currently he is the Chairman of PRiMA (Professionals in Risk Management Association).

Dr. Meuthia Ganie-Rochman has been involved in many CSR and governance issues since early 1990. She has been well exposed either as a prominent sociologist or her consultancy within the programs of various international development organizations.

Our Services & Solutions-APB Indonesia Subject Matter Expert / Advisory Board-


Our Office AddressAPB IndonesiaWisma Bisnis Indonesia 2nd fl.Jl. KH Mas Mansyur 12AJakarta 10220 – Indonesia

T: +62 215790 0805F: +62 215790 0806

Our Contact PersonMs. Diane Christina (Managing Director)

E: [email protected]: +62 81 199 1172

or

Mr. Charles R. Vorst(Managing Consultant)

E: [email protected]: +62 8 159169 787

Enterprise Risk Management Solution

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