The company's risk management activities are managed in accordance with its overall risk tolerance, which describes the number and type of risks that are acceptable. To be able to align the company’s strategy and business plans with the goal of enterprise risk management, the risk targets and risk tolerance limits for the basic risks have been set by the parties concerned.
The BOD together with all levels of the company is committed to strengthening and promoting a risk culture and risk handling manual, as well as strategically managing the company's overall risk profile. Below is the risk profile of the company, consisting of risks that have the potential of harming the company both on material and non-material terms:
In carrying out the company's projects-based business, the nature is always imminent and in close contact with the work. Thus, natural events such as floods, adverse weather, fire, earthquake, and volcanic eruption, would clearly threaten the achievement of the objectives of the company. The impact of natural disturbance in some locations, for example, has prevented project management from performing certain operations, which potentially result for not being able to contribute to the company's revenue.
Operational risks are associated with the risk exposure faced in the implementation of daily project work, both from internal and external factors. One of the characteristics of coal mining services business is that it is highly regulated, in particular concerning the safety of the workers. Therefore, the risk of fatality becomes a major focus of operational risk management, as well as the risk of lost time injury as a result of workplace accidents that befall employees.
Operational exposures that most often occur, especially in coal mining projects, are social disruptions from communities around the project. Other not-so-rare obstacles are demands for excessive compensations and demonstrations against the company’s activities in the area.
The company is faced by a variety of financial risks, including credit risk, foreign exchange risk, interest rate risk, and liquidity risk. The purpose of the company's overall risk management is to effectively control these risks and minimize the adverse effects that may have on its financial performance. The BOD reviews and approves policies for controlling each of these risks, and also monitors the market price risk of all of its financial instruments.
The main objective of risk management is to reduce losses incurred as a result of such risks. The process of risk management includes identification, evaluation and control of risks that could threaten the survival of the business or activities of the company. The following efforts have been pursued by the company to manage its risks.
- Conduct careful planning and prepare all the resources required for each activity.
- Prepare contingency plans for risks that have been identified previously.
- Transfer certain risks to third parties.
The above efforts are considered to have minimized the risks faced by the company, and that may cause harm either materially or immaterially.