Corporate Governance

The Company implements the risk management system to control all the risks that may lead disruption to business operations. The Company's business activities are not free from risk factors, which if managed properly can not only reduce the potential for servitude in doing business but can be a lever in increasing business. Risk management is carried out in line with GCG implementation. Each of identification and monitoring of risks that could arise and affect to operational activities and company business shall followed up with the assessment and risks analysis, and be described in risk profiles to determine the action plans of necessary prevention and mitigation needed, based on the clear and measurable method and system within the management of risks. The Company's Risk Profile The Company's operations are affected by various risks. In 2020, the Company yet again had identified, assessed, managed and monitored the risks inherent in all of the Company's operational and strategic functions. The risks the Company is exposed to are as follows: 1. Construction Industry's Growth Risk The potential impact of the global and domestic economic slowdown caused by Covid-19 pandemic could slow the construction industry's growth in oil and gas sector. In addition, this risk can adversely affect the Company's business activities, operating performance, financial condition and business prospect. 2. Business Competition Risk The domestic oil and gas construction services business in Indonesia is growing increasingly competitive. This is indicated by the escalating price war between contractors. In order to stay ahead of the competition, the Company continues to provide the best service by optimizing existing resources. The competition risk can adversely affect the Company's business activities, operating performance, financial condition and business prospect. 3. Social & Political Risk The changing dynamics of socio-political climate can have a significant impact on the economic sector, especially in oil and gas sector. This risk arises due to changes in the socio-political climate and the government's strategic decisions related to ideological, political, economic, social, cultural, and defense and security matters. The emergence of this risk can lead to subsequent risks, such as the likelihood of investors postponing direct investment while waiting for the socio-political climate to stabilize. If such a risk were to occur, numerous business activities in various industrial sectors may slow down or even ceased. This could lower the number of the Company's works/projects that could adversely affect the Company's business activities, operating performance, financial condition, and business prospect. Evaluation of Risk Management System Implementation The management periodically evaluates the effectiveness of the Company's risk management system, and works together with the project heads to evaluate project performance.