In order to implement the standard of risk management and to create value for State-Owned Enterprises (Badan Usaha Milik Negara/BUMN), the Minister of State-Owned Enterprises has issued Regulation No. PER-5/MBU/09/2022 on the Implementation of Risk Management by State-Owned Enterprises.
The regulation requires BUMN to implement risk management effectively by the board of directors (BOD) or through a general meeting of shareholders provided that (i) no provisions were determined under the capital-market laws (in the event that the BUMN is considered as public company) or (ii) any of the applicable regulations that apply within the sector of the BUMN is being violated.
The regulation also divides BUMN into several categories and classifications based on the level of risk intensity. Such categories and classifications will stipulate the minimum requirements for risk management organs and risk reporting that must be applied by the BUMN and its subsidiaries. In relation with risk reporting, BOD of the BUMN must prepare and submit risk management report that consist of (i) a risk management implementation report; (ii) an internal audit report; and (iii) an integrated governance report, which is an integral part of the quarterly periodic report and the annual BUMN performance report.
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