As part of its efforts to ensure business continuity, the Company has implemented an integrated risk management system, which encompasses the identification, assessment, control, and monitoring of various risks that may impact the achievement of business objectives. This system is designed to mitigate the negative impact of risks as well as to support the achievement of optimum performance by considering risks comprehensively, including strategic, operational, financial, as well as environmental and social risks.

Types of Risks and Their Management
The Company faces various types of risks that may impact its operations and achievement of business objectives. Below is an explanation of the key risks faced and their management strategies:

Financial Risk
Financial risks include fluctuations in exchange rates, interest rates, credit risk, and liquidity risk. To manage these risks, the Company adopts a cautious strategy in managing cash flow to ensure sufficient funds to meet financial obligations as they come due.

To maintain financial liquidity, the Company ensures that available cash is sufficient to meet daily operational needs and financial obligations. Additionally, to address currency exchange risk, the Company hedges international transactions and closely monitors interest rate risk, which may affect debt costs.

Credit Risk
Credit risk refers to the potential loss arising if business partners fail to meet their obligations. Financial instruments exposed to credit risk include cash and cash equivalents, trade receivables, investments, and other financial assets.

To mitigate credit risk, the Company selects reputable banks and financial institutions, diversifying its exposure to avoid concentration in a single institution. A selective approach in choosing business partners and regular evaluations of their financial condition are also part of efforts to reduce credit risk.

Operational Risk
Operational risks arise from failures in internal processes, systems, or human error. Given the high dependence on complex technological infrastructure, the Company routinely ensures system maintenance and updates to avoid operational disruptions. The Company also carries out continuous employee training and development and prepares backup and disaster recovery policies to maintain operational continuity during unexpected disruptions.

Market Risk
Market risk relates to fluctuations in prices and demand that can impact the Company’s competitiveness. To address this risk, the Company continuously conducts market research to maintain the relevance of its products and diversifies its revenue sources to avoid over-reliance on a single market or customer. The latest technologies are also leveraged to enhance efficiency and product innovation, as well as to maintain competitiveness in an increasingly competitive market.

Reputation Risk
Reputation risk arises when an event harms the Company’s image in the eyes of the public, customers, or business partners. To manage this risk, the Company upholds a commitment to transparency and ethical operations, ensuring effective communication with all stakeholders. The Company strengthened both external and internal communications, focusing on improving service quality and maintaining a positive image through digital platform.

Environmental and Social Risk
Environmental and social risks are related to compliance with environmental regulations and the social impact of the Company’s activities. To reduce negative environmental impact, the Company adopts environmentally friendly and energy-efficient technologies in all operational activities.

The Company also implements corporate social responsibility (CSR) programs that focus on community empowerment and social sustainability. These programs are carried out with an emphasis on diversity and inclusivity, supporting social initiatives that benefit local communities. In 2024, the Company further strengthened its commitment to sustainability, focusing on reducing its carbon footprint and enhancing quality of life through various social initiatives.

Monitoring of the System Effectiveness

To ensure the effectiveness of the implemented risk management system in managing various risks faced, the Company regularly evaluates its risk management policies, procedures, and strategies. This routine monitoring aims to assess whether the mitigation measures taken are sufficiently effective and to identify new risks or changes in the risk profile that the Company must address.

Performance and Compliance Monitoring
Each business unit and function related to risk management is responsible for ensuring that the established mitigation measures are properly implemented.

Review and Adjustment of Mitigation Strategies
The Company actively reviews the effectiveness of the mitigation strategies implemented to manage various risks. The results of this monitoring are used as a basis for making adjustments to the existing strategies, particularly regarding financial, operational, and market risk management policies. These adjustments are crucial to ensure the Company remains adaptable to changing economic, market, and regulatory conditions.

The Company is committed to continually strengthening its risk management system to ensure that the risks faced are managed effectively and efficiently, thereby supporting the achievement of business plans.

Management Statement

An effective risk management system is a crucial component in ensuring the continuity and success of the Company’s operations while supporting good governance principles. To mitigate potential risks that may impact the achievement of corporate objectives, the Board of Directors and Commissioners actively monitor and evaluate the implementation of the risk management system in place.

We ensure that the risk management system implemented includes identification, evaluation, control, and monitoring of risks that may affect the Company, whether strategic, operational, or financial. All policies and procedures implemented in this risk management system provide sufficient assurance that the Company is able to tackle existing challenges with a systematic, integrity-driven, and sustainable approach.

The Board of Directors and Commissioners of the Company hereby declare that the risk management system has functioned effectively and efficiently, providing sufficient assurance in achieving operational objectives, reliable reporting, and regulatory compliance. The Company is also committed to continuously improving and developing the risk management system to anticipate and address emerging risks in the future.