Risk Management

In line with the establishment of PHE Subholding Upstream, the Company's risks have become increasingly complex, necessitating their effective and efficient management in order to comply with applicable regulations and to mitigate the impact of uncertainty on business activities. PHE can ensure the sustainable growth of the business it runs and create value for its stakeholders through risk management and control.

The Company is aware of various internal and external risks, including strategic, operational, and financial risks. Risk management entails identifying, quantifying, mitigating, monitoring, and controlling these risks through procedures, systems, and methodologies. Additionally, PHE conducts periodic evaluations to ensure the implementation of risk management is successful.

The company is mindful of the precautionary approach in implementing risk management and has several policies, namely:

1. Implementation of an ISO 31000:2018, compliant risk management system that is integrated into all business processes and adheres to Good Corporate Governance principles with the goal of generating and protecting corporate value;
2. Mandate and Commitment from the Company's Risk Management Committee;
3. The Risk Owner prepares the Risk Register on a regular basis for ongoing business and investment activities, taking into account input from PT Pertamina (Persero) or the Corporate. The cost of Risk Treatment has been included in the RKAP in the prepared Risk Register;
4. Each of the highest leaders of Functions, Regionals and Subsidiaries is responsible for ensuring that risk management is carried out in accordance with the framework of politicies, strategies, and risk management principles;
5. Risk management (Top Risk) for On-going Businesses and PHE Subholding Upstream Priority Projects is monitored and reported to the Company's Risk Management on a regular basis;
6. The Internal Audit function performs a Risk Management Audit in order to obtain adequate assurance that risk management has being carried out effectively;
7. Increase the commitment, responsibility, awareness, and participation of the Board of Commissioners, Board of Directors, all employees and stakeholders:
8. Establish policies that will facilitate the effective implementation of risk management, including systems, standard operating procedures, and methodologies agreed upon by the Board of Commissioners and the Board of Directors.