Corporate governance

RISK MANAGEMENT

Naturally, our business is always exposed to risks that affect our business success and sustainability. Our risk management system helps guide us and anticipate those risks.

Our Business Risks

  1. International Fluctuations in the Price of CPO
    Our management has anticipated and has been prepared for a low CPO selling price since 2013, and as a result, we have focused on efficiency and reducing production costs to mitigate the effect.
  2. Plantation Development Delays due to compensation issues
    We aim to offer an attractive compensation for land, and integrate development plans that will benefit the community.
  3. Delays or Difficulties in Developing Land or Obtaining Land Rights, Social Conflicts or Land Right Disputes
    All but one of our subsidiaries holds Land Rights or Hak Guna Usaha (HGU), including our new estates in West Papua. 
  4. Community Social Conflict and Land Disputes
    We engage in regular communication and dialogue with community members to illustrate the benefits of the Company’s presence, its impact and mitigation.
  5. Difficulties in Attracting or Retaining Qualified Staff
    We continually monitor our remuneration and benefit programs. We aim to ensure that our employees enjoy a good quality of life. We also regularly make improvements to our learning and development capabilities, with emphasis on leadership development.
  6. Transportation or Logistics Disruption or Mishaps
    We have invested in building flexible and reliable transportation systems and only enter into transport contract agreements with experienced transportation companies.
  7. Adverse Weather, Climate, Crop Disease, Pests and Natural Disasters
    We ensure a range of agronomical best practices, including using high quality and high-resilience seeds, water gates and water catchment systems to preserve water; conversion of FFB waste to mulch; soil conservation and anti-erosion measures; the planting of cover crops; and chemical soil analyses.
  8. Stakeholder Aspirations
    We also actively attempt to maintain a good relationship and conduct dialogue with all groups interested in plantation activities, and offer various participation models that ensure a balanced agribusiness with conservation effort and community development.
  9. Plasma Program
    We always develop a capacity-building program for cooperative members and continue our coaching program to enable farmers to grow together with us. We also offer training programs and socialization on a regular basis to develop knowledge for cooperative members in the fields of agronomy and the business operation of a plantation.
  10. Fluctuations in Foreign Exchange Rate
    We introduced a policy that any bank loan by a subsidiary should be in the functional currency of that subsidiary, which is the same as its bookkeeping currency. This has significantly reduced our foreign exchange fluctuation risk.