Description Related to Risk Management, Compliance and Internal Audit
In PT Principal Asset Management, Compliance Department has a clear, direct and independent reporting line to the BOC, to ensure that there is a clear distinction between Compliance Department and other business/ operational areas. On a day-to-day basis, it works closely with the various business/ operational departments in addressing any compliance issues.
PT Principal Asset Management has Policies and Procedures that govern risk compliance and risk awareness in every level of the company. Effective measurement, reporting and control of risk are vital to ensure that the PT Principal Asset Management business activities are managed in accordance with overall strategic and risk management objectives. Risks are managed through the implementation of trading guidelines and exposure limits are set by the Company to safeguard the portfolios from declining market conditions which must be adhered by all the Portfolio Managers.
PT Principal Asset Management has several risk management parameters: Equity Market risk (stock limit, sector limit), Security specific risk (firm-wide holding limit), Interest rate risk (duration), Credit risk (credit rating), and Liquidity risk (exposure to illiquid stock). Any breaches on the limitations will be discussed in Quarterly Investment Committee, Monthly Investment-Operation Committee meeting, and Quarterly Risk Management Committee meeting. Prevention and monitoring are carried out by the system (Charles River) and PT Principal Asset Management’s Compliance Officer, in day to day basis.
On regular basis, Principal Group will perform audit to ensure the effectiveness of internal control.
PT Principal Asset Management has regular compliance monitoring programs:
- Daily monitoring investment restrictions of the PT Principal Asset Management Jakarta’s mutual Funds
- Monthly summary compliance report
- Periodically internal self-testing for required function regulated by OJK