OJK Circular No. 27/SEOJK.05/2021 on Health Level Assessment of Infrastructure Financing Companies

To:
The Board of Directors of Infrastructure Financing Companies, At their place.

COPY

CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA NUMBER 27 /SEOJK.05/2021

REGARDING

HEALTH LEVEL ASSESSMENT OF INFRASTRUCTURE FINANCING COMPANIES

In relation to the mandate of Article 29 paragraph (6) of Financial Services Authority Regulation Number 46/POJK.05/2020 concerning Infrastructure Financing Companies (State Gazette of the Republic of Indonesia Year 2020 Number 249, Supplement to the State Gazette of the Republic of Indonesia Number 6576), it is necessary to further regulate the health level assessment of infrastructure financing companies in the Financial Services Authority Circular as follows:

I. GENERAL PROVISIONS

In this Financial Services Authority Circular, the following terms are meant:

Financing is the provision of funds or anything equivalent to it, including those conducted based on Sharia principles by infrastructure financing companies.
Infrastructure is technical, physical, system, hardware, and software facilities needed to provide services to the public and support the structural network so that economic and social growth of the community can run well.
Infrastructure Financing Company is a business entity specifically established to conduct Financing on Infrastructure projects and/or the implementation of other activities or facilities in order to support Infrastructure Financing, including Infrastructure Financing Companies that conduct all or part of their business activities based on Sharia principles.
Sharia Principle is Islamic law provisions based on fatwas and/or Sharia conformity statements from the National Sharia Board of the Indonesian Ulema Council.
Sharia Business Unit, hereinafter abbreviated as UUS, is a work unit of the head office of the Infrastructure Financing Company that conducts Financing based on Sharia Principles and/or functions as the parent office of offices that conduct Financing based on Sharia Principles.
Board of Directors is a company organ that has the authority and is fully responsible for the management of the company for the interests of the company, in accordance with the purpose and objectives of the company and represents the company, both inside and outside of court, in accordance with the provisions of the articles of association.
Board of Commissioners is a company organ tasked with conducting general and/or specific supervision in accordance with the articles of association and providing advice to the Board of Directors.
Sharia Supervisory Board, hereinafter abbreviated as DPS, is a board that has the task and function of supervision and provides advice to the Board of Directors regarding the implementation of Infrastructure Financing Company activities to ensure compliance with Sharia Principles.
Health Level of Infrastructure Financing Company is the result of the assessment of the condition of the Infrastructure Financing Company conducted on good corporate governance, risk profile, profitability, and capital adequacy.
Composite Rating is the final rating of the Health Level Assessment of the Infrastructure Financing Company.
Subsidiary Company is a company owned and/or controlled by the Infrastructure Financing Company directly or indirectly, both domestically and abroad.
Control is an action aimed at influencing the management and/or policy of the subsidiary company in any way, either directly or indirectly.

II. GENERAL PRINCIPLES OF HEALTH LEVEL ASSESSMENT OF INFRASTRUCTURE FINANCING COMPANIES

General principles in conducting assessments of the Health Level of Infrastructure Financing Companies are as follows:
a. risk-oriented; b. proportionality;
c. materiality and significance; and
d. comprehensive and structured.
The meaning of risk-oriented as referred to in item 1 letter a includes, among others:
a. the Health Level Assessment of Infrastructure Financing Companies is based on the risks of the Infrastructure Financing Company and the impact on the overall performance of the Infrastructure Financing Company; b. the Health Level Assessment of Infrastructure Financing Companies is conducted by identifying internal and external factors that can increase risk or affect the financial performance of the Infrastructure Financing Company at present and in the future; and
c. Infrastructure Financing Companies are able to detect the root causes of problems, both internal and external, more early and take preventive and corrective steps effectively and efficiently.
The meaning of proportionality as referred to in item 1 letter b includes, among others:
a. the use of parameters or indicators in each factor of the Health Level Assessment of Infrastructure Financing Companies is conducted by considering the characteristics and complexity of the Infrastructure Financing Company's business; b. the parameters or indicators for the Health Level Assessment of Infrastructure Financing Companies in this Financial Services Authority Circular are minimum standards that must be used in assessing the Health Level of Infrastructure Financing Companies; and
c. in addition to the parameters or indicators as referred to in letter b, Infrastructure Financing Companies may use additional parameters or indicators in accordance with the characteristics and complexity of the business in assessing the Health Level of Infrastructure Financing Companies so as to reflect the condition of the Infrastructure Financing Company better.
The meaning of materiality and significance as referred to in item 1 letter c includes, among others:
a. Infrastructure Financing Companies need to consider the materiality and significance of the factors for the Health Level Assessment of Infrastructure Financing Companies, namely good corporate governance, risk profile, profitability, and capital adequacy, as well as the significance of parameters or indicators for assessment in each factor in concluding assessment results and setting factor ratings; and b. the determination of materiality and significance is based on analysis supported by adequate data and information regarding the risks and financial performance of the Infrastructure Financing Company.
The meaning of comprehensive and structured as referred to in item 1 letter d includes, among others:
a. the assessment process is conducted thoroughly and systematically and is focused on the main problems of the Infrastructure Financing Company; b. analysis is conducted in an integrated manner, namely by considering the interrelationships between risks and between factors of the Health Level Assessment of Infrastructure Financing Companies as well as consolidated Subsidiary Companies; and
c. analysis must be supported by key facts and relevant ratios to show the level, trends, and level of problems faced by the Infrastructure Financing Company.

III. PROCEDURE FOR INDIVIDUAL HEALTH LEVEL ASSESSMENT OF INFRASTRUCTURE FINANCING COMPANIES

Infrastructure Financing Companies are required to conduct Health Level Assessments of Infrastructure Financing Companies using a risk-based approach individually.
Infrastructure Financing Companies that conduct part of their business based on Sharia Principles are required to conduct health level assessments of the UUS using an individual approach.
Individual health level assessment of the UUS is an inseparable part of the Health Level Assessment of the Infrastructure Financing Company that is its parent.
Individual Health Level Assessment as referred to in item 1 is conducted with an assessment scope covering the following factors:
a. good corporate governance; b. risk profile;
c. profitability; and
d. capital adequacy.
Individual health level assessment of the UUS as referred to in item 3 covers assessment of the risk profile factor as referred to in item 4 letter b.

IV. ASSESSMENT OF THE GOOD CORPORATE GOVERNANCE FACTOR

The assessment of the good corporate governance factor is an assessment of the implementation of good corporate governance principles by the Infrastructure Financing Company.
Good corporate governance principles refer to the principles as referred to in the Financial Services Authority Regulation concerning Infrastructure Financing Companies, while still considering the characteristics and complexity of the Infrastructure Financing Company's business.
The determination of the rating for the good corporate governance factor is conducted based on analysis of:
a. the implementation of good corporate governance principles for the Infrastructure Financing Company; b. the adequacy of governance over the structure, process, and results of the implementation of good corporate governance for the Infrastructure Financing Company; and
c. other information related to good corporate governance for the Infrastructure Financing Company based on relevant data and information.
Infrastructure Financing Companies assess the good corporate governance factor using their own assessment worksheets (self-assessment) as contained in Table I.A Appendix I which is an inseparable part of this Financial Services Authority Circular.
Infrastructure Financing Companies set the rating for the good corporate governance factor categorized into 5 (five) ratings, namely:
a. rating 1; b. rating 2;
c. rating 3;
d. rating 4; and e. rating 5, with the order of the good corporate governance factor ratings being smaller reflecting better implementation of corporate governance by the Infrastructure Financing Company.
The determination of the rating for the good corporate governance factor is conducted in accordance with Table I.B Appendix I which is an inseparable part of this Financial Services Authority Circular.

V. ASSESSMENT OF THE RISK PROFILE FACTOR

A. General

The assessment of the risk profile factor is an assessment of:
a. inherent risk; and b. the quality of risk management implementation, in the operations of the Infrastructure Financing Company.
The risks assessed consist of 8 (eight) types of risks, namely:
a. strategic risk; b. operational risk;
c. credit risk;
d. market risk; e. liquidity risk; f. legal risk; g. compliance risk; and h. reputational risk.
In assessing the risk profile, Infrastructure Financing Companies pay attention to the scope of risk management implementation as regulated in the Financial Services Authority Regulation concerning Infrastructure Financing Companies.

B. Assessment of Inherent Risk

The assessment of inherent risk is an assessment of risks inherent in the business activities of the Infrastructure Financing Company, both quantifiable and non-quantifiable, that have the potential to affect the financial position of the Infrastructure Financing Company.
The characteristics of inherent risk of the Infrastructure Financing Company are determined by internal and external factors, including:
a. business strategy; b. business characteristics;
c. complexity of the Infrastructure Financing Company;
d. conditions of the Financing industry; and e. macroeconomic conditions.
The assessment of inherent risk is conducted by considering parameters or indicators that are quantitative and qualitative.
The determination of the level of inherent risk for each type of risk refers to the general principles of Health Level Assessment of Infrastructure Financing Companies as referred to in Section II.
The determination of the level of inherent risk for each type of risk is categorized into ratings as follows:
a. rating 1 (low); b. rating 2 (low-medium);
c. rating 3 (medium);
d. rating 4 (medium-high); and e. rating 5 (high).

C. Assessment of Inherent Risk for Strategic Risk

Strategic risk is the risk resulting from inaccuracies in making and/or implementing strategic decisions and failure to anticipate changes in the business environment.
Sources of strategic risk can be caused by, among others:
a. setting strategies that are not aligned with the vision and mission of the Infrastructure Financing Company; b. inadequate analysis of internal and external environments;
c. setting strategic objectives that are too aggressive;
d. inaccuracies in strategy implementation; and e. failure to anticipate changes in the business environment such as technological changes, changes in macroeconomic conditions, market competition, and changes in relevant authority policies.
In assessing the inherent risk of strategic risk, the parameters or indicators used are at least:
a. the alignment of business strategy with the vision and mission of the Infrastructure Financing Company and business environment conditions; b. the choice of business strategy level, namely high-risk strategy and low-risk strategy;
c. the strategic position of the Infrastructure Financing Company in the Financing industry; and
d. the achievement of business realization of the Infrastructure Financing Company.
Infrastructure Financing Companies assess the inherent risk for strategic risk using the parameters or indicators for inherent risk assessment as contained in Table II.A.1 Appendix II which is an inseparable part of this Financial Services Authority Circular.
Infrastructure Financing Companies set the level of inherent risk for strategic risk in 5 (five) ratings, namely:
a. rating 1 (low); b. rating 2 (low-medium);
c. rating 3 (medium);
d. rating 4 (medium-high); and e. rating 5 (high), using guidelines as contained in Table II.A.2 Appendix II which is an inseparable part of this Financial Services Authority Circular.

D. Assessment of Inherent Risk for Operational Risk

Operational risk is the risk resulting from inadequacy and/or malfunction of internal processes, human error, system failure, and/or the occurrence of external events that affect the operations of the Infrastructure Financing Company.
Sources of operational risk can be caused by, among others:
a. weaknesses in human resources; b. weaknesses in internal processes;
c. inadequate systems and infrastructure; and
d. external events that have a negative impact on the Infrastructure Financing Company.
In assessing the inherent risk of operational risk, the parameters or indicators used are at least:
a. organizational complexity and business activities; b. human resources;
c. technology and information systems;
d. fraud risk; e. business and organizational disruption; and f. the level of interaction and dependency of the Infrastructure Financing Company.
Infrastructure Financing Companies assess the inherent risk for operational risk using the parameters or indicators for inherent risk assessment as contained in Table II.B.1 Appendix II which is an inseparable part of this Financial Services Authority Circular.
Infrastructure Financing Companies set the level of inherent risk for operational risk in 5 (five) ratings, namely:
a. rating 1 (low); b. rating 2 (low-medium);
c. rating 3 (medium);
d. rating 4 (medium-high); and e. rating 5 (high), using guidelines as contained in Table II.B.2 Appendix II which is an inseparable part of this Financial Services Authority Circular.

E. Assessment of Inherent Risk for Credit Risk

Credit risk is the risk resulting from the failure of other parties to fulfill their obligations to the Infrastructure Financing Company.
Credit risk due to debtor failure includes, among others, credit concentration risk, counterparty credit risk, and settlement risk.
Credit risk is generally present in all activities of the Infrastructure Financing Company whose performance depends on the performance of debtors, counterparties, and/or issuers.
Credit concentration risk as referred to in item 2 is the risk arising from the concentration of fund provision to 1 (one) party or a group of parties, industry, sector, and/or specific geographic area that has the potential to cause significant losses that can threaten the continuity of the Infrastructure Financing Company's business.
Counterparty credit risk as referred to in item 2 is the risk arising from the failure of the counterparty to fulfill its obligations and arises from transaction types with specific characteristics, for example, transactions influenced by fair value or market value movements.
Settlement risk as referred to in item 2 is the risk arising from the failure to deliver cash and/or financial instruments on the agreed settlement date from the sale and/or purchase of financial instruments transactions.
In assessing the inherent risk of credit risk, the parameters or indicators used are at least:
a. financing distribution strategy; b. composition of financing receivables portfolio and concentration level;
c. quality of financing receivables and adequacy of provisions; and
d. external factors.
Infrastructure Financing Companies assess the inherent risk for credit risk using the parameters or indicators for inherent risk assessment as contained in Table II.C.1 Appendix II which is an inseparable part of this Financial Services Authority Circular.
Infrastructure Financing Companies set the level of inherent risk for credit risk in 5 (five) ratings, namely:
a. rating 1 (low); b. rating 2 (low-medium);
c. rating 3 (medium);
d. rating 4 (medium-high); and e. rating 5 (high), using guidelines as contained in Table II.C.2 Appendix II which is an inseparable part of this Financial Services Authority Circular.

F. Assessment of Inherent Risk for Market Risk

Market risk is the risk on asset, liability, equity, and/or administrative account positions, and/or derivative transactions, resulting from overall changes in market conditions.
Market risk includes, among others, interest rate risk, exchange rate risk, commodity risk, and equity risk.
Risk management implementation for equity risk is applied by Infrastructure Financing Companies that conduct consolidation with Subsidiary Companies.
In assessing the inherent risk of market risk, the parameters or indicators used are at least:
a. business strategy and policy related to market risk; b. volume and composition of asset portfolio exposed to market risk; and
c. volume and composition of liability portfolio exposed to market risk.
Infrastructure Financing Companies assess the inherent risk for market risk using the parameters or indicators for inherent risk assessment as contained in Table II.D.1 Appendix II which is an inseparable part of this Financial Services Authority Circular.
The Company sets the level of inherent risk for market risk in 5 (five) ratings, namely:
a. rating 1 (low); b. rating 2 (low-medium);
c. rating 3 (medium);
d. rating 4 (medium-high); and e. rating 5 (high), using guidelines as contained in Table II.D.2 Appendix II which is an inseparable part of this Financial Services Authority Circular.

G. Assessment of Inherent Risk for Liquidity Risk

Liquidity risk is the risk resulting from the inability of the Infrastructure Financing Company to meet maturing liabilities from cash flow funding sources and/or from liquid assets that can be easily converted into cash, without disrupting the activities and financial conditions of the Infrastructure Financing Company.
Liquidity risk can also be caused by the inability of the Infrastructure Financing Company to liquidate assets without incurring material discounts due to the absence of an active market or severe market disruption, which is called market liquidity risk.
In assessing the inherent risk of liquidity risk, the parameters or indicators used are at least:
a. composition of short-term assets and liabilities including administrative account transactions; b. cash flow management;
c. vulnerability to funding needs; and
d. access to funding sources.
Infrastructure Financing Companies assess the inherent risk for liquidity risk using the parameters or indicators for inherent risk assessment as contained in Table II.E.1 Appendix II which is an inseparable part of this Financial Services Authority Circular.
Infrastructure Financing Companies set the level of inherent risk for liquidity risk in 5 (five) ratings, namely:
a. rating 1 (low); b. rating 2 (low-medium);
c. rating 3 (medium);
d. rating 4 (medium-high); and e. rating 5 (high), using guidelines as contained in Table II.E.2 Appendix II which is an inseparable part of this Financial Services Authority Circular.

H. Assessment of Inherent Risk for Legal Risk

Legal risk is the risk resulting from legal claims and/or weaknesses in legal aspects.
Legal risk can arise from, among others:
a. absence and/or changes in legislation; b. weaknesses in agreements, such as failure to meet contract validity requirements or imperfect collateral binding, causing a transaction already conducted by the Infrastructure Financing Company to be non-compliant with regulations; and/or
c. litigation processes arising from third-party lawsuits against the Infrastructure Financing Company or the Infrastructure Financing Company's lawsuits against third parties.
In assessing the inherent risk of legal risk, the parameters or indicators used are at least:
a. absence and/or changes in legislation; b. weaknesses in agreements or cooperation; and
c. dispute resolution processes.
The Company assesses the inherent risk for legal risk using the parameters or indicators for inherent risk assessment as contained in Table II.F.1 Appendix II which is

is an integral part of this Circular Letter of the Financial Services Authority.

Infrastructure Financing Companies set the inherent risk level for legal risk into 5 (five) ranks, namely:
a. rank 1 (low); b. rank 2 (relatively low);
c. rank 3 (moderate);
d. rank 4 (relatively high); and e. rank 5 (high), using the guidelines as contained in Table II.F.2 of Appendix II which is an integral part of this Circular Letter of the Financial Services Authority.

I. Assessment of Inherent Risk on Compliance Risk

Compliance risk is the risk arising from the Infrastructure Financing Company's failure to comply with and/or implement applicable laws and regulations and provisions applicable to Infrastructure Financing Companies.
Sources of compliance risk arise, among others, from:
a. legal behavior, namely the behavior or activities of the Infrastructure Financing Company that deviate from or violate applicable laws and regulations; and b. organizational behavior, namely the behavior or activities of the Infrastructure Financing Company that deviate or conflict with generally applicable standards.
In assessing the inherent risk of compliance risk, the parameters or indicators used are at least:
a. the type and significance of violations committed; b. the frequency of violations (including sanctions) or the Infrastructure Financing Company's track record of non-compliance;
c. violations of applicable laws and regulations, provisions applicable to Infrastructure Financing Companies, or generally applicable business standards; and
d. follow-up on violations, including fulfillment of the action plan submitted to the Financial Services Authority.
Infrastructure Financing Companies assess the inherent risk for compliance risk using the parameters or indicators for inherent risk assessment as contained in Table II.G.1 of Appendix II which is an integral part of this Circular Letter of the Financial Services Authority.
Infrastructure Financing Companies set the inherent risk level for compliance risk into 5 (five) ranks, namely:
a. rank 1 (low); b. rank 2 (relatively low);
c. rank 3 (moderate);
d. rank 4 (relatively high); and e. rank 5 (high), using the guidelines as contained in Table II.G.2 of Appendix II which is an integral part of this Circular Letter of the Financial Services Authority.

J. Assessment of Inherent Risk on Reputational Risk

Reputational risk is the risk arising from a decrease in the level of trust of stakeholders stemming from negative perceptions of the Infrastructure Financing Company.
Reputational risk arises, among others, due to negative media coverage and/or rumors regarding the Infrastructure Financing Company, as well as the Infrastructure Financing Company's ineffective communication strategy.
In assessing the inherent risk of reputational risk, the parameters or indicators used are at least:
a. the reputational influence of directors, owners, and the group; b. violations of business ethics;
c. the complexity of products and business cooperation;
d. the frequency, materiality, and exposure of negative reporting; and e. the frequency and materiality of debtor or consumer complaints.
Infrastructure Financing Companies assess the inherent risk for reputational risk using the parameters or indicators for inherent risk assessment as contained in Table II.H.1 of Appendix II which is an integral part of this Circular Letter of the Financial Services Authority.
Infrastructure Financing Companies set the inherent risk level for reputational risk into 5 (five) ranks, namely:
a. rank 1 (low); b. rank 2 (relatively low);
c. rank 3 (moderate);
d. rank 4 (relatively high); and e. rank 5 (high), using the guidelines as contained in Table II.H.2 of Appendix II which is an integral part of this Circular Letter of the Financial Services Authority.

K. Assessment of the Quality of Risk Management Implementation

The assessment of the quality of risk management implementation reflects the assessment of the adequacy of the risk control system covering all pillars of risk management implementation as regulated in the Financial Services Authority Regulation regarding Infrastructure Financing Companies.
The assessment of the quality of risk management implementation aims to evaluate the effectiveness of the implementation of risk management by Infrastructure Financing Companies covering all pillars of risk management implementation as regulated in the Financial Services Authority Regulation regarding Infrastructure Financing Companies.
The implementation of risk management by Infrastructure Financing Companies varies significantly according to size, complexity, and the level of risk tolerated by the Infrastructure Financing Company.
The assessment of the quality of risk management implementation is an assessment of 4 (four) interrelated aspects, namely:
a. active supervision by the Board of Directors, Board of Commissioners, and DPS; b. the adequacy of policies, procedures, and risk limit setting;
c. the adequacy of risk identification, measurement, monitoring, and control processes, as well as the risk management information system; and
d. a comprehensive internal control system.
Active supervision by the Board of Directors, Board of Commissioners, and DPS as referred to in item 4 letter a includes evaluation of:
a. the adequacy of active supervision by the Board of Directors, Board of Commissioners, and DPS; and b. the adequacy of the exercise of authority and responsibility of the Board of Directors, Board of Commissioners, and DPS.
The adequacy of policies, procedures, and risk limit setting as referred to in item 4 letter b includes evaluation of:
a. the formulation of the level of risk to be taken (risk appetite) and risk tolerance; b. risk management strategies aligned with the level of risk to be taken and risk tolerance;
c. the adequacy of risk management policies and procedures; and
d. the adequacy of risk limit setting.
The adequacy of risk identification, measurement, monitoring, and control processes, as well as the risk management information system as referred to in item 4 letter c includes evaluation of:
a. the adequacy of risk identification, measurement, monitoring, and control processes; b. the adequacy of the risk management information system; and
c. the adequacy of the quantity and quality of human resources in supporting the effectiveness of the risk management process.
A comprehensive internal control system as referred to in item 4 letter d includes evaluation of:
a. the adequacy of the internal control system; and b. the adequacy of review by independent parties within the Infrastructure Financing Company, either by the unit handling risk management or by the unit handling internal audit.
Review by the unit handling risk management as referred to in item 8 letter b includes, among others, the methods, assumptions, and variables used to measure and set risk limits.
Review by the unit handling internal audit as referred to in item 8 letter b includes, among others, the reliability of the risk management framework and the implementation of risk management by business units and/or support units.
The level of quality of risk management implementation for each type of risk is categorized into 5 (five) ranks, namely:
a. rank 1 (strong); b. rank 2 (fairly strong);
c. rank 3 (adequate);
d. rank 4 (fairly weak); and e. rank 5 (weak).
The determination of the quality of risk management implementation is done for each type of risk, namely:
a. strategic risk, using the guidelines as contained in Table II.A.3 of Appendix II which is an integral part of this Circular Letter of the Financial Services Authority; b. operational risk, using the guidelines as contained in Table II.B.3 of Appendix II which is an integral part of this Circular Letter of the Financial Services Authority;
c. credit risk, using the guidelines as contained in Table II.C.3 of Appendix II which is an integral part of this Circular Letter of the Financial Services Authority;
d. market risk, using the guidelines as contained in Table II.D.3 of Appendix II which is an integral part of this Circular Letter of the Financial Services Authority; e. liquidity risk, using the guidelines as contained in Table II.E.3 of Appendix II which is an integral part of this Circular Letter of the Financial Services Authority; f. legal risk, using the guidelines as contained in Table II.F.3 of Appendix II which is an integral part of this Circular Letter of the Financial Services Authority; g. compliance risk, using the guidelines as contained in Table II.G.3 of Appendix II which is an integral part of this Circular Letter of the Financial Services Authority; and h. reputational risk, using the guidelines as contained in Table II.H.3 of Appendix II which is an integral part of this Circular Letter of the Financial Services Authority.

L. Determination of Risk Profile Factor Rank

The determination of the risk profile factor rank is carried out in the following stages:
a. determination of the risk level for each risk; b. determination of the composite inherent risk level and the composite quality of risk management implementation; and
c. determination of the risk profile factor rank.
The determination of the risk level as referred to in item 1 letter a is established based on the assessment of the inherent risk level and the quality of risk management implementation for each type of risk as referred to in letters B through K.
After the Infrastructure Financing Company sets the inherent risk level and the quality of risk management implementation, the Infrastructure Financing Company sets the risk level for each type of risk, namely:
a. strategic risk; b. operational risk;
c. credit risk;
d. market risk; e. liquidity risk; f. legal risk; g. compliance risk; and h. reputational risk, using the guidelines as contained in Table II.I of Appendix II which is an integral part of this Circular Letter of the Financial Services Authority.
In the event that the Infrastructure Financing Company has Subsidiaries, the Infrastructure Financing Company considers the impact of the Subsidiary's risk on the Infrastructure Financing Company's risk profile by considering the significance and materiality of the Subsidiary and/or the significance of issues within the Subsidiary.
The determination of the composite inherent risk level and the composite quality of risk management implementation as referred to in item 1 letter b is done by paying attention to the significance of each risk to the overall risk profile.
The Infrastructure Financing Company sets the risk profile factor rank as referred to in item 1 letter c based on a comprehensive and structured analysis of the results of determination as referred to in item 1 letters a and b, paying attention to the significance of each risk to the overall risk profile.
The risk profile factor rank is the final conclusion on the Infrastructure Financing Company's risk after considering mitigation carried out through the implementation of risk management.
The determination of the risk profile rank as referred to in item 6 and item 7 uses the format as contained in Table II.J of Appendix II which is an integral part of this Circular Letter of the Financial Services Authority.
The determination of the risk profile factor rank consists of 5 (five) ranks, namely:
a. rank 1; b. rank 2;
c. rank 3;
d. rank 4; and e. rank 5, with the order of the risk profile factor ranks being smaller reflecting the lower risk faced by the Infrastructure Financing Company.
The determination of the risk profile factor rank is done in accordance with Table II.K of Appendix II which is an integral part of this Circular Letter of the Financial Services Authority.

M. Assessment of Risk Profile Factors for UUS

Provisions regarding the assessment of risk profile factors for Infrastructure Financing Companies as referred to in letters A through L apply mutatis mutandis to the assessment of risk profile factors for UUS (Sharia Business Units).
Infrastructure Financing Companies that have UUS must conduct risk profile factor assessments for UUS in accordance with Sharia Principles using:
a. parameters or indicators of inherent risk, guidelines for setting inherent risk levels, and guidelines for setting the quality of risk management implementation with the following formats:

strategic risk, using Tables II.A.1, II.A.2, and II.A.3;
operational risk, using Tables II.B.1, II.B.2, and II.B.3;
credit risk, using Tables II.C.1, II.C.2, and II.C.3;
market risk, using Tables II.D.1, II.D.2, and II.D.3;
liquidity risk, using Tables II.E.1, II.E.2, and II.E.3;
legal risk, using Tables II.F.1, II.F.2, and II.F.3;
compliance risk, using Tables II.G.1, II.G.2, and II.G.3;
reputational risk, using Tables II.H.1, II.H.2, and II.H.3;
b. guidelines for setting the risk level for each type of risk, using Table II.I;
c. format for setting the composite risk profile using Table II.J; and
d. guidelines for setting the risk profile factor rank, using Table II.K, as contained in Appendix II which is an integral part of this Circular Letter of the Financial Services Authority.

VI. ASSESSMENT OF PROFITABILITY FACTORS

The assessment of profitability factors must at least include assessment of:
a. the Infrastructure Financing Company's performance in generating profit (profitability); b. the sources supporting profitability; and
c. the continuity of components supporting profitability.
The assessment is conducted by considering the level, trend, structure, stability of profitability, and the comparison of the Infrastructure Financing Company's performance with that of an equivalent peer group, both through quantitative and qualitative aspect analysis.
In determining the equivalent peer group, the Infrastructure Financing Company needs to pay attention to the business scale, characteristics, and/or complexity of the Infrastructure Financing Company's business, as well as the availability of data and information owned.
Infrastructure Financing Companies assess profitability factors using parameters or indicators as contained in Table III.A of Appendix III which is an integral part of this Circular Letter of the Financial Services Authority.
The determination of the profitability factor rank is based on a comprehensive and structured analysis of the profitability parameters or indicators as referred to in item 4, paying attention to the significance of each parameter or indicator and considering other issues affecting the Infrastructure Financing Company's profitability.
Infrastructure Financing Companies set the profitability factor rank into 5 (five) ranks, namely:
a. rank 1; b. rank 2;
c. rank 3;
d. rank 4; and e. rank 5, with the order of the profitability factor ranks being smaller reflecting better profitability conditions.
The determination of the profitability factor rank is done in accordance with Table III.B of Appendix III which is an integral part of this Circular Letter of the Financial Services Authority.

VII. ASSESSMENT OF CAPITAL FACTORS

The assessment of capital factors must at least include assessment of:
a. the level of capital adequacy; and b. capital management.
In conducting the assessment, Infrastructure Financing Companies need to consider the level, trend, structure, and stability of capital, paying attention to the performance of an equivalent peer group as well as the adequacy of the Infrastructure Financing Company's capital management.
The assessment is conducted using both quantitative and qualitative parameters or indicators.
In determining the equivalent peer group, the Infrastructure Financing Company needs to pay attention to the business scale, characteristics, and/or complexity of the Infrastructure Financing Company's business, as well as the availability of data and information owned.
Parameters or indicators in assessing capital include:
a. capital adequacy; and b. capital management.
Infrastructure Financing Companies assess capital factors using parameters or indicators as contained in Table IV.A of Appendix IV which is an integral part of this Circular Letter of the Financial Services Authority.
In order to calculate capital adequacy, the adjusted assets as referred to in Table IV.A of Appendix IV may consider the ranking performed by rating agencies by referring to Table IV.B of Appendix IV which is an integral part of this Circular Letter of the Financial Services Authority.
Capital factors are established based on a comprehensive and structured analysis of the parameters or indicators as referred to in item 6, paying attention to the materiality and significance of each parameter or indicator, and considering other issues affecting the Infrastructure Financing Company's capital.
Infrastructure Financing Companies set the capital factor rank into 5 (five) ranks, namely:
a. rank 1; b. rank 2;
c. rank 3;
d. rank 4; and e. rank 5, with the order of the capital factor ranks being smaller reflecting better capital conditions for the Infrastructure Financing Company.
The determination of the capital factor rank is done in accordance with Table IV.C of Appendix IV which is an integral part of this Circular Letter of the Financial Services Authority.

VIII. ASSESSMENT OF COMPOSITE HEALTH RANK OF THE COMPANY

The Health Level of Infrastructure Financing Companies is established based on a comprehensive and structured analysis of the rank of each factor and by paying attention to the general principles of assessing the Health Level of Infrastructure Financing Companies as referred to in Part II.
In conducting comprehensive analysis, Infrastructure Financing Companies need to consider the ability to face significant changes in external conditions.
Infrastructure Financing Companies set the Composite Rank into 5 (five) composite ranks, namely:
a. Composite Rank 1 (CR-1); b. Composite Rank 2 (CR-2);
c. Composite Rank 3 (CR-3);
d. Composite Rank 4 (CR-4); and e. Composite Rank 5 (CR-5), with the order of Composite Ranks being smaller reflecting a healthier Infrastructure Financing Company.
The determination of Composite Rank is done in accordance with Appendix V which is an integral part of this Circular Letter of the Financial Services Authority.

IX. PROCEDURES FOR ASSESSING THE HEALTH LEVEL OF THE COMPANY ON A CONSOLIDATED BASIS

In the event that the Infrastructure Financing Company controls Subsidiaries, in addition to conducting health level assessment using a risk-based approach on an individual basis as referred to in Part III item 1, the Infrastructure Financing Company is required to conduct health level assessment using a risk-based approach on a consolidated basis.
The Health Level Assessment of Infrastructure Financing Companies as referred to in item 1 is conducted with an assessment scope covering the following factors:
a. good corporate governance; b. risk profile;
c. profitability; and
d. capital.
In conducting consolidated assessment, the Infrastructure Financing Company pays attention to:
a. the significance and materiality of the Subsidiary's share to the Infrastructure Financing Company on a consolidated basis; and b. issues within the Subsidiary regarding good corporate governance, risk profile, profitability, and capital that have a significant impact on the Infrastructure Financing Company on a consolidated basis.
The determination of the significance and materiality of the Subsidiary's share to the Infrastructure Financing Company on a consolidated basis as referred to in item 3 letter a can be determined through:
a. comparison of the Subsidiary's total assets to the Infrastructure Financing Company's total assets on a consolidated basis; or b. the significance of specific positions in the Subsidiary that affect the performance of the Infrastructure Financing Company on a consolidated basis, such as risk profile, profitability, and capital.
The determination of the significance of issues within the Subsidiary as referred to in item 3 letter b, among others, considers issues present in the Subsidiary that have a significant impact on the performance or condition of the Infrastructure Financing Company on a consolidated basis, for example:
a. issues related to the Subsidiary's business that can impact the reputational risk, credit risk, or liquidity risk of the Infrastructure Financing Company on a consolidated basis; b. issues in risk governance; and/or
c. weaknesses in the implementation of risk management by the Subsidiary.
For Infrastructure Financing Companies that conduct Health Level Assessment on a consolidated basis:
a. the mechanism for determining the rank of each assessment factor and the determination of the Composite Health Rank of the Infrastructure Financing Company on a consolidated basis; and b. the categorization of the rank of each assessment factor and the Composite Rank on a consolidated basis, must refer to the mechanism for determining and categorizing the rank of Infrastructure Financing Companies on an individual basis.
Parameters or indicators used in the individual Health Level Assessment of Infrastructure Financing Companies can be used when assessing the Health Level of Infrastructure Financing Companies on a consolidated basis.
The use of parameters or indicators as referred to in item 7 may be supplemented with other parameters or indicators as long as they are relevant to the business scale, characteristics, and complexity of the Infrastructure Financing Company on a consolidated basis.
In assessing the Health Level of Infrastructure Financing Companies on a consolidated basis, the mechanism for determining the rank and category of rank for each assessment factor and the determination of the composite rank of the Health Level of Infrastructure Financing Companies on a consolidated basis refers to the assessment procedures for the Health Level of Infrastructure Financing Companies on an

individual as referred to in Roman III through Roman VIII.

The determination of the good corporate governance factor rating on a consolidated basis is conducted by considering:
a. the significance and materiality of the Subsidiary Company's share to the Infrastructure Financing Company on a consolidated basis; and b. issues related to the implementation of good corporate governance principles in the Subsidiary Company that significantly affect the implementation of good corporate governance principles on a consolidated basis.
The assessment factors for the Subsidiary Company's governance used for the assessment of the application of good corporate governance principles on a consolidated basis are determined by considering the business characteristics of the Subsidiary Company and supported by adequate data and information.
The determination of the Infrastructure Financing Company's consolidated governance rating is conducted by considering the impact of the application of the Subsidiary Company's governance.
The determination of the consolidated risk profile factor is conducted by considering:
a. the significance and materiality of the Subsidiary Company's share to the Infrastructure Financing Company on a consolidated basis; and b. risk profile issues in the Subsidiary Company that significantly affect the consolidated risk profile.
The determination of the consolidated risk profile factor is conducted through the following stages:
a. the determination of inherent risk level, the quality of risk management application, and the Infrastructure Financing Company's consolidated risk level is calculated by considering the impact caused by the Subsidiary Company's risk on the Infrastructure Financing Company's consolidated risk profile; and b. the determination of the Infrastructure Financing Company's consolidated risk profile rating is calculated by considering the impact of all Subsidiary Company risks on the Infrastructure Financing Company's consolidated risk profile.
The determination of the consolidated profitability factor rating is conducted based on a comprehensive and structured analysis of specific profitability parameters or indicators resulting from the Infrastructure Financing Company's consolidated financial statements and other financial information, by considering:
a. the significance and materiality of the Subsidiary Company's share to the Infrastructure Financing Company on a consolidated basis; and b. profitability issues in the Subsidiary Company that significantly affect consolidated profitability.
The assessment is conducted by referring to specific parameters or indicators applicable to the Infrastructure Financing Company individually, as long as they are supported by adequate data or information.
In conducting the assessment, the Infrastructure Financing Company may add parameters or indicators that are relevant to the scale, characteristics, and complexity of the Subsidiary Company.
The determination of the consolidated capital adequacy factor rating is conducted based on a comprehensive and structured analysis of specific capital adequacy parameters or indicators resulting from the Infrastructure Financing Company's consolidated financial statements and other financial information, by considering:
a. the significance and materiality of the Subsidiary Company's share to the Infrastructure Financing Company on a consolidated basis; and b. capital adequacy issues in the Subsidiary Company that significantly affect consolidated capital adequacy.
The assessment is conducted by referring to specific parameters or indicators applicable to the Infrastructure Financing Company individually, as long as they are supported by adequate data or information.
In conducting the assessment, the Infrastructure Financing Company may add parameters or indicators that are relevant to the scale, characteristics, and complexity of the Subsidiary Company.

X. REPORTING

The Infrastructure Financing Company is required to conduct a self-assessment of the Infrastructure Financing Company's Health Level.
The self-assessment of the Infrastructure Financing Company's Health Level as referred to in number 1 is conducted at least annually for the position at the end of December.
In addition to conducting a self-assessment as referred to in number 1, the Infrastructure Financing Company is required to update the self-assessment of the Infrastructure Financing Company's Health Level when necessary.
The Infrastructure Financing Company updates the self-assessment of the Infrastructure Financing Company's Health Level as referred to in number 3, among others, in the following cases:
a. the financial condition of the Infrastructure Financing Company deteriorates; b. there are external and internal factors that can significantly affect the Infrastructure Financing Company's Health Level; or
c. other conditions as determined by the Financial Services Authority and/or the Infrastructure Financing Company requiring an update of the Infrastructure Financing Company's Health Level assessment.
The results of the self-assessment of the Infrastructure Financing Company's Health Level and UUS are submitted using the report format as referred to in Appendix VI, which is an integral part of this Financial Services Authority Circular.
The Infrastructure Financing Company submits the results of the self-assessment of the Infrastructure Financing Company's Health Level to the Financial Services Authority as follows:
a. at the latest on February 15 for the Infrastructure Financing Company's Health Level assessment for the position at the end of December; or b. at the latest 30 (thirty) working days since the date of updating the self-assessment of the Infrastructure Financing Company's Health Level.
If the submission deadline for the results of the self-assessment of the Infrastructure Financing Company's Health Level as referred to in number 6 letters a and b falls on a holiday, the results of the self-assessment of the Infrastructure Financing Company's Health Level are submitted on the next working day.
The Infrastructure Financing Company must submit the results of the self-assessment of the Infrastructure Financing Company's Health Level to the Financial Services Authority via the network through the Financial Services Authority's data communication network system.
In the event that the Financial Services Authority's data communication network system as referred to in number 8 is not yet available or experiences technical disturbances, the submission is made to the Financial Services Authority offline by:
a. being submitted directly; or b. sent through a courier service company.
In the event of technical disturbances as referred to in number 9, the Financial Services Authority announces this through the Financial Services Authority's website.
The submission of reports offline as referred to in number 9 must be submitted in electronic data form using media such as a compact disc or other electronic data storage media.
The submission of reports as referred to in number 11 must be accompanied by a printed cover letter signed by the Board of Directors.
The report on the results of the self-assessment of the Infrastructure Financing Company's Health Level and/or updates to the self-assessment of the Infrastructure Financing Company's Health Level offline as referred to in number 9 is submitted to:

a. for Infrastructure Financing Companies:
Executive Head of Supervision of Insurance Companies, Pension Funds, Financing Institutions, and Other Financial Service Institutions Financial Services Authority u.p. Director of Financing Institution Supervision Wisma Mulia 2 Building, 15th Floor Jalan Jenderal Gatot Subroto Kav. 40 Jakarta 12710; b. for Infrastructure Financing Companies that conduct all their business activities based on Sharia Principles and UUS from the Infrastructure Financing Company:
Executive Head of Supervision of Insurance Companies, Pension Funds, Financing Institutions, and Other Financial Service Institutions Financial Services Authority u.p. Director of Sharia Financial Institutions and Business Networks (IKNB) Wisma Mulia 2 Building, 15th Floor Jalan Jenderal Gatot Subroto Kav. 40 Jakarta 12710.

In the event of a change in the address of the Financial Services Authority's office for the submission of reports as referred to in number 13, the Financial Services Authority will convey notification regarding the address change via letter or announcement.
The Infrastructure Financing Company is deemed to have submitted the report on the results of the self-assessment of the Infrastructure Financing Company's Health Level and/or updates to the self-assessment of the Infrastructure Financing Company's Health Level with the following provisions:
a. for submissions via the network through the Financial Services Authority's data communication network system, evidenced by a receipt from the Financial Services Authority's data communication network system; or b. for offline submissions, evidenced by a receipt from the Financial Services Authority.

This copy is consistent with the original
Legal Director 1
Legal Department signed
Mufli Asmawidjaja

XI. CLOSING

This Financial Services Authority Circular takes effect on the date of determination.

Determined in Jakarta on November 11, 2021
EXECUTIVE HEAD OF SUPERVISION OF
INSURANCE COMPANIES, PENSION FUNDS,
FINANCING INSTITUTIONS, AND
OTHER FINANCIAL SERVICE INSTITUTIONS
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA,

signed
RISWINANDI

APPENDIX I
FINANCIAL SERVICES AUTHORITY CIRCULAR
REPUBLIC OF INDONESIA
NUMBER 27 /SEOJK.05/2021
REGARDING
ASSESSMENT OF THE HEALTH LEVEL OF
INFRASTRUCTURE FINANCING COMPANIES

ASSESSMENT OF GOOD CORPORATE GOVERNANCE FACTOR HEALTH LEVEL OF INFRASTRUCTURE FINANCING COMPANIES
Table I.A: Self-Assessment Worksheet (Self Assessment)
Good Corporate Governance Factor Rating
Table I.B: Guidelines for Determining the Rating of the Good Corporate Governance Factor

Table I.A: Self-Assessment Worksheet (Self Assessment) Good Corporate Governance Factor

Objective

The assessment of governance structure aims to evaluate the adequacy of the structure and infrastructure of good corporate governance so that the implementation process of good corporate governance principles produces outcomes that meet the expectations of the Infrastructure Financing Company's stakeholders. Included in good corporate governance structure are the Board of Directors, Board of Commissioners, committees, and work units within the Infrastructure Financing Company. Included in good corporate governance infrastructure, among others, are the Infrastructure Financing Company's policies and procedures, management information systems, and the main duties and functions of each organizational structure.
The assessment of governance process aims to evaluate the effectiveness of the implementation process of good corporate governance principles, supported by the adequacy of the structure and infrastructure of good corporate governance, so as to produce outcomes that meet the expectations of the Infrastructure Financing Company's stakeholders.
The assessment of governance outcome aims to evaluate the quality of outcomes that meet the expectations of the Infrastructure Financing Company's stakeholders as a result of the implementation process of good corporate governance principles, supported by the adequacy of the structure and infrastructure of good corporate governance.

Included in the implementation results (outcome) covers qualitative and quantitative aspects, among others:
a. adequacy of report transparency; b. compliance with statutory regulations;
c. improvement of human resource quality;
d. objectivity in conducting assessment or audit; and/or e. Infrastructure Financing Company performance such as profitability, efficiency, and capital adequacy.

Filling Instructions:

The Infrastructure Financing Company conducts a self-assessment of the application of good corporate governance principles in the "analysis" column in Appendix I.
The parameters or indicators for assessing the good corporate governance factor in Appendix I are minimum standards that must be used in assessing the good corporate governance factor.
The Infrastructure Financing Company may add other parameters or indicators according to the characteristics and complexity of the Infrastructure Financing Company's business.
The assessment is conducted per position and trend for the last 12 (twelve) months for parameters or indicators that are quantitative.
In assessing the good corporate governance factor on a consolidated basis, parameters or indicators for assessing the good corporate governance factor individually can be used, adjusted to the scale, characteristics, and complexity of the Subsidiary Company's business.
In the event of changes to regulations regarding criteria or indicators, the Infrastructure Financing Company must adjust the criteria or indicators to the applicable regulations.

No. Parameter or Indicator Analysis

Implementation of Board of Directors' duties and responsibilities:
a. Governance structure (governance structure)

The Infrastructure Financing Company must have at least 3 (three) Board of Directors members.
Each Infrastructure Financing Company Board of Directors member must reside in Indonesia.
Each Infrastructure Financing Company Board of Directors member is prohibited from holding concurrent positions as a Board of Directors member in other companies, except for Board of Directors members responsible for supervision of investments in subsidiaries with Infrastructure Financing business, who perform functional duties as members of the Board of Commissioners in subsidiaries controlled by the Infrastructure Financing Company, as long as such concurrent positions do not cause the individual to neglect the execution of duties and authorities as a Board of Directors member of the Infrastructure Financing Company.
The Infrastructure Financing Company must have a Board of Directors that oversees the compliance function.
The Infrastructure Financing Company's Board of Directors is prohibited from holding concurrent positions as a Board of Commissioners in more than 1 (one) other company.
Each Board of Directors member must meet the competency and propriety assessment requirements.
Candidate Board of Directors members who do not meet the competency and propriety assessment requirements as referred to in number (6) are prohibited from performing actions, duties, and functions as Board of Directors members, even if they have received approval and have been appointed by the General Meeting of Shareholders (GMS).
All Board of Directors members have relevant knowledge for their positions.
The Board of Directors has working guidelines and regulations that include provisions for work ethics, working hours, and meetings.
The Board of Directors does not use individual advisors and/or professional services as consultants except for special projects, which are based on clear contracts covering the scope of work, responsibilities, project duration, and costs, and the consultant is an independent party qualified to handle special projects.
All Board of Directors members have passed the competency and propriety assessment and have obtained approval letters from the Financial Services Authority.
Board of Directors members have adequate and relevant competencies for their positions to perform duties and responsibilities and are able to implement the competencies they possess in the execution of duties and responsibilities.
Board of Directors members conduct continuous learning to increase knowledge about the Infrastructure Financing Company and recent developments in the financial field or other fields supporting the execution of duties and responsibilities.
Board of Directors members cultivate continuous learning to increase knowledge about the Infrastructure Financing Company and recent developments in the financial field or other fields supporting the execution of duties and responsibilities at all levels or organizational tiers.
b. Governance process (governance process)
Board of Directors members do not grant general power of attorney to other parties resulting in the transfer of duties and functions of the Board of Directors.
The Board of Directors is fully responsible for the management of the Infrastructure Financing Company.
The Board of Directors manages the Infrastructure Financing Company according to authorities and responsibilities as regulated in the articles of association and statutory regulations.
The Board of Directors has executed duties and responsibilities independently from shareholders.
The Board of Directors has applied good corporate governance principles in every business activity of the Infrastructure Financing Company at all levels or organizational tiers.
The Board of Directors has followed up on audit findings and recommendations from work units with internal audit functions, external auditors, and the results of supervision by the Financial Services Authority and/or other supervisory authorities.
The Board of Directors has provided complete, accurate, up-to-date, and timely data and information to the Board of Commissioners.
Board of Directors meeting decisions have been made through deliberation for consensus or majority vote in the event that consensus cannot be reached.
Each decision taken by the Board of Directors can be implemented and is in accordance with applicable policies, guidelines, and working regulations.
The Board of Directors has established policies and strategic decisions through Board of Directors meetings.
The Board of Directors does not utilize the Infrastructure Financing Company for personal, family, and/or other parties' interests that can harm or reduce the profits of the Infrastructure Financing Company.
The Board of Directors does not take and/or receive personal profits from the Infrastructure Financing Company other than remuneration and other facilities determined by the GMS.
The Board of Directors does not conduct transactions with conflicts of interest with the Infrastructure Financing Company's activities.
The Board of Directors does not fulfill shareholder requests related to the Infrastructure Financing Company's operational activities other than those established in the GMS.
c. Governance outcome (governance outcome)
The Board of Directors has accounted for the execution of their duties to shareholders through the GMS.
The Board of Directors' accountability for the execution of their duties is accepted by shareholders through the GMS.
The Board of Directors has disclosed the Infrastructure Financing Company's strategic policies in the field of human resources to employees through media easily accessible to employees.
The Board of Directors has communicated to employees regarding the business direction of the Infrastructure Financing Company in achieving the company's mission and vision.
Board of Directors meeting results have been recorded in meeting minutes and documented well, including clear disclosure of dissenting opinions that occurred in the Board of Directors meetings, accompanied by the reasons for the differing opinions.
In the report on the implementation of good corporate governance, all Board of Directors members have at least disclosed:
a) share ownership reaching 5% (five percent) or more in the Infrastructure Financing Company concerned or in other companies located domestically and internationally; b) financial relationships and family relationships with other Board of Directors members, other Board of Commissioners members, Supervisory Board members (DPS), and/or shareholders of the Infrastructure Financing Company or business group where the Board of Directors and Board of Commissioners members hold positions; c) remuneration and other facilities; and d) share options owned by the Board of Directors.
Improvement of knowledge, skills, and abilities of Board of Directors members in managing the Infrastructure Financing Company, demonstrated among others by improved Infrastructure Financing Company performance, resolution of problems faced by the Infrastructure Financing Company, and achievement of results according to stakeholder expectations of the Infrastructure Financing Company.
Improvement of knowledge, skills, and abilities of all Infrastructure Financing Company employees at all levels or organizational tiers, demonstrated among others by improved individual performance according to duties and responsibilities.
Improvement of continuous learning culture to increase knowledge about the Infrastructure Financing Company and recent developments in the financial field or other fields supporting the execution of duties and responsibilities at all levels or organizational tiers, demonstrated among others by increased employee participation in certifications related to employees' duties and responsibilities and/or education or training to develop individual quality.
The Infrastructure Financing Company's operational activities are not disrupted and/or the Board of Directors does not provide unfair benefits to shareholders that impact the reduction of the Infrastructure Financing Company's profits and/or cause losses to the Infrastructure Financing Company, due to shareholder intervention in the composition and/or execution of the Board of Directors' duties.

Implementation of Board of Commissioners' duties and responsibilities
a. Governance structure (governance structure)

The Infrastructure Financing Company must have at least:
a) 2 (two) Board of Commissioners members; and b) 1 (one) independent commissioner, which can be counted towards the fulfillment of the Board of Commissioners number.
The Infrastructure Financing Company's Board of Commissioners is prohibited from holding concurrent positions as a Board of Commissioners in more than 3 (three) other companies. Concurrent positions are not included if:
a) Board of Commissioners members other than independent commissioners perform functional duties from shareholders of the Infrastructure Financing Company in the form of a legal entity within their business group; and/or b) Board of Commissioners members hold positions in organizations or non-profit institutions, as long as the individual does not neglect the execution of duties and responsibilities as a Board of Commissioners member of the Infrastructure Financing Company.
Concurrent positions for independent commissioners of the Infrastructure Financing Company are prohibited in other Infrastructure Financing Companies and/or in companies engaged in Infrastructure projects.
The Board of Commissioners has working guidelines and regulations including provisions for work ethics, working hours, and meetings.
Board of Commissioners members serving as independent commissioners are not affiliated with shareholders, Board of Directors members, other Board of Commissioners members, and/or Supervisory Board members (DPS), meaning they do not have financial, managerial, share ownership, and/or family relationships with shareholders, Board of Directors members, other Board of Commissioners members, and/or Supervisory Board members (DPS) or other relationships that can affect their ability to act independently.
All Board of Commissioners members have passed the competency and propriety assessment

and has obtained approval letter from the Financial Services Authority.

Board of Commissioners members possess adequate and relevant competencies for their positions to carry out duties and responsibilities and are able to implement the competencies they possess in the execution of their duties and responsibilities.
Board of Commissioners members engage in continuous learning to enhance knowledge about Infrastructure Financing Companies and recent developments related to the financial sector or other fields supporting the execution of their duties and responsibilities.

b. Governance process

The Board of Commissioners has carried out duties to ensure the implementation of good corporate governance principles in every business activity of the Infrastructure Financing Company at all levels or tiers of the organization.
The Board of Commissioners has carried out supervision over the execution of duties and responsibilities of the Board of Directors periodically and/or ad hoc, and has provided advice to the Board of Directors.
In carrying out supervisory duties, the Board of Commissioners has directed, monitored, and evaluated the implementation of the Infrastructure Financing Company's strategic policies.
The Board of Commissioners is not involved in operational decision-making activities of the Infrastructure Financing Company, except in the provision of funds to related parties and other matters stipulated in the Articles of Association of the Infrastructure Financing Company and/or provisions of legislation in carrying out supervisory functions.
The Board of Commissioners has ensured that the Board of Directors has followed up on audit findings and recommendations from the internal audit unit, external auditors, results of supervision by the Financial Services Authority and/or results of supervision by other authorities.
The Board of Commissioners has followed up on audit findings and recommendations from the internal audit unit, external auditors, results of supervision by the Financial Services Authority and/or results of supervision by other authorities.
For Infrastructure Financing Companies that have Independent Commissioners, notification must be made to the Financial Services Authority within a maximum of 10 (ten) working days since the discovery of violations of financial legislation by the Infrastructure Financing Company, as well as conditions or estimated conditions that may endanger the continuity of the Infrastructure Financing Company's business.
The Board of Commissioners has carried out duties and responsibilities independently.
The Board of Commissioners has ensured that formed committees have executed their tasks effectively.
The Board of Commissioners has provided sufficient time to execute duties and responsibilities optimally.
Decision-making in Board of Commissioners meetings has been conducted based on deliberation for consensus or majority vote in the event that consensus cannot be reached.
The Board of Commissioners does not utilize the Infrastructure Financing Company for personal, family, and/or third-party interests that can harm or reduce the profits of the Infrastructure Financing Company.
The Board of Commissioners does not take and/or receive personal benefits from the Infrastructure Financing Company other than remuneration and other facilities determined by the General Meeting of Shareholders (GMS).

c. Governance outcome

Board of Commissioners meeting results have been recorded in meeting minutes and documented well, including dissenting opinions that occurred in the meeting, which are clearly stated along with the reasons for the differing opinions.
Board of Commissioners meeting results have been distributed to all Board of Commissioners members and relevant parties.
Board of Commissioners meeting results constitute recommendations and/or directives that can be implemented by the GMS and/or the Board of Directors.
In the report on the implementation of good corporate governance, Board of Commissioners members have at least disclosed:

a) share ownership reaching 5% (five percent) or more in the relevant Infrastructure Financing Company or in other companies located domestically and internationally;

b) financial relationships and family relationships with other Board of Directors members, other Board of Commissioners members, Sharia Supervisory Board (DPS) members, and/or shareholders of the Infrastructure Financing Company or the business group where the respective Board of Directors and Board of Commissioners members serve;

c) remuneration and other facilities; and

d) share options held by the Board of Commissioners.

Enhancement of knowledge, expertise, and abilities of Board of Commissioners members in supervising the Infrastructure Financing Company is demonstrated, among others, by improved performance of the Infrastructure Financing Company, resolution of problems faced by the Infrastructure Financing Company, and achievement of results in accordance with Stakeholder expectations.
Enhancement of a continuous learning culture to increase knowledge about Infrastructure Financing Companies and recent developments related to the financial sector or other fields supporting the execution of duties and responsibilities of Board of Commissioners members.
Operational activities of the Infrastructure Financing Company are not disrupted and/or the Board of Commissioners does not provide unfair benefits to owners that impact the reduction of the Infrastructure Financing Company's profits and/or cause losses to the Company, due to shareholder intervention in the composition and/or execution of duties of the Board of Commissioners.
Board of Commissioners members do not utilize the Infrastructure Financing Company for personal, family, and/or third-party interests that can harm or reduce the profits of the Infrastructure Financing Company.
Board of Commissioners members do not take and/or receive personal benefits from the Infrastructure Financing Company other than remuneration and other facilities determined by the GMS.

Execution of Duties and Responsibilities of the Sharia Supervisory Board (DPS)

a. Governance structure

The number of DPS members consists of one Sharia expert or more.
The DPS has received a recommendation from the National Sharia Board of the Indonesian Ulema Council (DSN-MUI).
DPS members do not hold concurrent positions as members of the Board of Directors or Board of Commissioners in the same Infrastructure Financing Company.
DPS members have passed the competency and propriety assessment.
Appointment of DPS members is conducted through the GMS in accordance with the term as referred to in the Financial Services Authority Regulation regarding the competency and propriety assessment of key personnel of financial service institutions.

b. Governance process

DPS carries out duties and responsibilities in accordance with Good Corporate Governance principles.
In carrying out duties and responsibilities, DPS has provided advice and suggestions to the Board of Directors and supervised the activities of the Infrastructure Financing Company to ensure compliance with Sharia Principles, including aspects of operational activities, use of contracts, products, and marketing practices.
DPS has provided sufficient time to execute duties and responsibilities optimally.
Decision-making in DPS meetings has been conducted based on deliberation for consensus and constitutes a joint decision of the DPS.
DPS does not conduct transactions that have conflicts of interest with the activities of the Infrastructure Financing Company.
DPS does not utilize the Infrastructure Financing Company for personal, family, and/or third-party interests that can harm or reduce the profits of the Infrastructure Financing Company.
DPS does not take and/or receive personal benefits from the Infrastructure Financing Company other than remuneration and other facilities determined by the GMS.

c. Governance outcome

DPS meeting results are recorded in meeting minutes and documented well, including disclosure of dissenting opinions clearly along with the reasons for differing opinions.
DPS has submitted the DPS Supervision Results Report through the good corporate governance report and other reports in accordance with legislative provisions.
In the good corporate governance implementation report, all DPS members have at least disclosed:

a) concurrent positions as DPS members in other Islamic financial institutions; and

b) remuneration and other facilities.

Enhancement of knowledge, expertise, and abilities of DPS members in supervising the compliance of Infrastructure Financing Company activities with Sharia Principles is demonstrated, among others, by improved performance of the Infrastructure Financing Company through a decrease in violations of Sharia Principles and resolution of problems related to violations of Sharia Principles.

Execution of Duties and Responsibilities of Shareholders

a. Governance structure

Controlling shareholders possess adequate integrity and financial feasibility.
Controlling shareholders have been approved in the competency and propriety assessment process by the Financial Services Authority.

b. Governance process

Shareholders have a commitment to undertake necessary efforts if the Infrastructure Financing Company faces financial difficulties.
Shareholders have a commitment to the operational development of the Infrastructure Financing Company.
Shareholders through the GMS strive to ensure that the Infrastructure Financing Company is operated based on sound business practices.

c. Governance outcome

Shareholders do not interfere in the operational activities of the Infrastructure Financing Company that are the responsibility of the Board of Directors in accordance with the Articles of Association of the Infrastructure Financing Company and legislation, except in carrying out rights and obligations as the GMS.
Shareholders serving as members of the Board of Directors, Board of Commissioners, or DPS in the same Infrastructure Financing Company must prioritize the interests of the Infrastructure Financing Company.
Shareholders do not influence or instruct the Board of Directors, Board of Commissioners, DPS, officials, and/or employees of the Infrastructure Financing Company to provide unfair benefits.
Shareholders do not influence or instruct the Board of Directors, Board of Commissioners, DPS, officials, and/or employees of the Infrastructure Financing Company to commit acts violating prudential principles in the financial services sector and/or good corporate management principles.
For Infrastructure Financing Companies that have Islamic Banking Units (UUS), Shareholders do not influence or instruct the Board of Directors, Board of Commissioners, DPS, officials, and/or employees of the Infrastructure Financing Company to commit acts violating Sharia Principles in the Islamic financial services sector.
Shareholders do not intervene in the execution of duties of the Board of Directors and Board of Commissioners that cause the Infrastructure Financing Company to experience difficulties, endanger the continuity of the Infrastructure Financing Company's business, and/or the financial services industry.
Shareholders demonstrate seriousness and/or take necessary steps to support the strategic plan of the Infrastructure Financing Company, among others reflected in the owners' commitment and efforts to strengthen the capital of the Infrastructure Financing Company.

Implementation of Compliance Functions of Infrastructure Financing Companies

a. Governance structure

The unit handling compliance functions is independent from operational units.
The unit or employees responsible report to Board of Directors members who oversee the compliance function.
Infrastructure Financing Companies have provided quality human resources in the compliance unit to complete tasks effectively.

b. Governance process

The Director overseeing the compliance function has duties and responsibilities including:

a) ensuring the Infrastructure Financing Company's compliance with legislative provisions, by:

(1) establishing necessary steps considering prudential principles;

(2) monitoring and maintaining that the business activities of the Infrastructure Financing Company do not deviate from regulations; and

(3) monitoring and maintaining the Infrastructure Financing Company's compliance with all agreements and commitments made by the Infrastructure Financing Company to the Financial Services Authority and competent authorities;

b) submitting periodic reports on the execution of duties and responsibilities to the Chief Director, with copies to the Board of Commissioners or competent parties according to the organizational structure of the Infrastructure Financing Company;

c) formulating strategies to foster a compliance culture in the Infrastructure Financing Company;

d) proposing compliance policies or compliance principles to be determined by the Board of Directors;

e) establishing compliance systems and procedures to be used to formulate internal regulations and guidelines of the Infrastructure Financing Company;

f) ensuring that all policies, regulations, systems, procedures, and business activities conducted by the Infrastructure Financing Company comply with legislative provisions;

g) minimizing compliance risks of the Infrastructure Financing Company;

h) taking preventive actions so that policies and/or decisions taken by branch office management do not deviate from Financial Services Authority regulations and legislative provisions; and

i) carrying out other tasks related to the compliance function.

The appointment of the Director overseeing the compliance function has been in accordance with legislative provisions.
The Board of Directors has:

a) approved the Infrastructure Financing Company's compliance policy in the form of a formal document on the compliance function that is effective;

b) been responsible for communicating all policies, guidelines, systems, and procedures to all relevant organizational levels; and

c) been responsible for creating an effective and permanent compliance function as part of the overall compliance policy of the Infrastructure Financing Company.

The unit handling compliance functions has duties and responsibilities including:

a) establishing steps to support the creation of a compliance culture in all business activities of the Infrastructure Financing Company at every organizational level;

b) identifying, measuring, monitoring, and controlling compliance risks;

c) assessing and evaluating the effectiveness, adequacy, and suitability of policies, regulations, systems, and procedures owned by the Infrastructure Financing Company with legislative provisions;

d) reviewing and/or recommending updates and improvements to policies, regulations, systems, and procedures owned by the Infrastructure Financing Company to ensure compliance with legislative provisions;

e) making efforts to ensure that policies, regulations, systems, procedures, and business activities of the Infrastructure Financing Company comply with legislative provisions; and

f) carrying out other tasks related to the compliance function.

c. Governance outcome

The scope of the report on the execution of duties by the Director overseeing the compliance function has been in accordance with internal regulations of the Infrastructure Financing Company.
The Infrastructure Financing Company has successfully reduced the level of violations of regulations.
The Infrastructure Financing Company has successfully built a compliance culture in decision-making and in operational activities of the Infrastructure Financing Company.

Implementation of Internal Audit Functions

a. Governance structure

The organizational structure of the unit handling internal audit of the Infrastructure Financing Company has been in accordance with internal regulations of the Infrastructure Financing Company.
The institutionalization of the unit handling internal audit is independent from operational units.
Infrastructure Financing Companies provide quality human resources in the unit handling internal audit to complete tasks effectively.

b. Governance process

The Board of Directors is responsible for:

a) the creation of an internal control structure, and ensuring the execution of the internal audit function of the Infrastructure Financing Company at every management level; and

b) follow-up on internal audit findings of the Infrastructure Financing Company in accordance with policies and directives of the Board of Commissioners.

Infrastructure Financing Companies implement internal audit functions effectively on all aspects and elements of activities that are directly estimated to affect the interests of the Infrastructure Financing Company and stakeholders.
The examination plan of the unit handling internal audit of the Infrastructure Financing Company, the adequacy of the examination scope, and the depth of examination have been adequate.
There are no deviations in the realization of the examination plan of the unit handling internal audit of the Infrastructure Financing Company.
Infrastructure Financing Companies plan and realize the periodic and continuous improvement of human resource skills quality.
The unit handling internal audit has carried out supervisory functions independently with adequate task coverage in accordance with plans, execution, and monitoring of audit results.
The unit handling internal audit has carried out duties at least including assessment of:

a) the adequacy of the internal control system of the Infrastructure Financing Company;

b) the effectiveness of the internal control system of the Infrastructure Financing Company; and

c) performance quality.

The unit handling internal audit has reported all examination findings in accordance with regulations.
The unit handling internal audit has monitored, analyzed, and reported on the progress of corrective actions taken by the auditee.
The unit handling internal audit has compiled and updated work guidelines and systems and procedures to execute tasks for internal auditors periodically in accordance with legislative provisions.

c. Governance outcome

The Board of Directors is responsible for the availability of reports on the execution of internal audit functions of the Infrastructure Financing Company to the GMS.
Examination findings from the unit handling internal audit have been followed up, and no recurring findings have occurred.
The unit handling internal audit acts objectively in conducting audits.
Internal audit functions have been executed adequately by considering, among others:

a) audit programs cover all work units, with implementation considering risk levels in each work unit;

b) audit programs and audit scopes are adequate in accordance with generally accepted internal audit principles, including the fulfillment of independence, objectivity, no restrictions in the scope and coverage of internal audits; and

c) the fulfillment of the number and quality of internal auditors.

Implementation of External Audit Functions

a. Governance structure

The assignment of audits to public accountants and public accounting firms must at least meet the following aspects:

capacity of the appointed public accounting firm (reasons for nomination);
legality of the work agreement (including the amount of remuneration or service fees);
scope of the audit;
professional standards of public accountants; and
communication between the Financial Services Authority and the appointed public accounting firm.

b. Governance process

In the execution of financial statement audits of Infrastructure Financing Companies, Infrastructure Financing Companies appoint public accountants and public accounting firms registered with the Financial Services Authority and not currently subject to administrative sanctions by competent authorities.
The appointment of the same public accountant and public accounting firm by the Infrastructure Financing Company has been in accordance with legislative provisions.
The appointment of public accountants and public accounting firms must first obtain approval from the GMS based on recommendations from the audit committee through the Board of Commissioners.
The appointed public accountants and public accounting firms are able to work independently, meet professional standards of public accountants, and adhere to work agreements and audit scopes established.
Public accountants have communicated with the Financial Services Authority regarding the condition of the Infrastructure Financing Company being audited in the preparation and execution of the audit.
Public accountants have executed audits independently and professionally.
Public accountants report audit results and management letters to the Financial Services Authority.

c. Governance outcome

Audit results and management letters have described significant problems of the Infrastructure Financing Company and were submitted promptly to the Financial Services Authority by the appointed public accounting firm.
The scope of audit results is at least in accordance with the audit scope as regulated in applicable provisions.
Auditors act objectively in conducting audits.

Implementation of Risk Management including Internal Control Systems

a. Governance structure

Infrastructure Financing Companies have had an adequate organizational structure to support the implementation of good risk management and internal controls, including units handling internal audit, units handling risk management, and compliance units.
Infrastructure Financing Companies have had risk management policies and procedures and the establishment of adequate risk limits.

b. Governance process

The Board of Directors has clear duties and responsibilities, including:
a) formulating risk management policies, including written and comprehensive risk management strategies and frameworks, including the determination of overall risk limits and per risk type, taking into account the level of risk taken and risk tolerance relative to capital adequacy. After obtaining approval from the Board of Commissioners, the Board of Directors establishes the aforementioned risk management policies, strategies, and frameworks; b) formulating, establishing, and updating procedures and tools to identify, measure, monitor, and control risks; c) formulating and establishing transaction approval mechanisms, including those exceeding limits and authority for each job level; d) evaluating and/or updating risk management policies, strategies, and frameworks at least once (1) in one (1) year or at a more frequent frequency if there are changes in factors affecting the business activities of the Infrastructure Financing Company, risk exposure, and/or risk profile significantly; e) establishing an organizational structure, including clear authorities and responsibilities at each job level related to the implementation of risk management; f) being responsible for the implementation of risk management policies, strategies, and frameworks approved by the Board of Commissioners, and evaluating and providing guidance based on reports submitted by the work unit specializing in risk management, including reports regarding the risk profile; g) ensuring that all material risks and the impacts arising from such risks have been followed up on and that accountability reports have been submitted to the Board of Commissioners periodically. The aforementioned reports include reports on the development and issues related to material risks, accompanied by improvement steps that have been, are being, and will be taken; h) ensuring the implementation of improvement steps for problems or deviations in the business activities of the Infrastructure Financing Company found by the internal audit specialized work unit effectively; i) developing a risk management culture, including risk awareness at all levels of the organization, including adequate communication to all levels of the organization regarding the importance of effective internal controls; j) ensuring sufficient financial support and infrastructure to manage and control risks; and k) ensuring that the risk management function has been applied independently, reflected among others by the separation of functions between the work unit specializing in risk management that performs identification, measurement, monitoring, and control of risks and the work unit that carries out other operational activities.
The Board of Commissioners has clear duties and responsibilities, including:
a) approving risk management policies, including risk management strategies and frameworks, established in accordance with the level of risk taken (risk appetite) and risk tolerance (risk tolerance); b) evaluating risk management policies and risk management strategies at least once (1) in one (1) year or at a more frequent frequency if there are changes in factors significantly affecting the business activities of the Infrastructure Financing Company; and c) evaluating the accountability of the Board of Directors and providing improvement guidance regarding the implementation of risk management policies periodically. The evaluation is conducted to ensure that the Board of Directors manages the activities and risks of the Infrastructure Financing Company effectively.
The Infrastructure Financing Company has implemented a comprehensive and reliable internal control system.

c. Governance outcome

The Infrastructure Financing Company implements risk management effectively, adjusted to the objectives, policies, size, and complexity of the business as well as the capabilities of the Infrastructure Financing Company.
The Board of Directors and Board of Commissioners are able to conduct active supervision over the implementation of risk management policies and strategies.
The Infrastructure Financing Company does not conduct business activities that exceed capital capacity to absorb risk losses.

Transparency of financial and non-financial conditions, implementation reports of good corporate governance, and internal reporting
a. Governance structure

The Infrastructure Financing Company has policies and procedures regarding the implementation of transparency of financial and non-financial conditions.
The Infrastructure Financing Company prepares reports on the implementation of good corporate governance, which are part of the annual report at the end of each fiscal year, with coverage in accordance with applicable regulations.
Complete, accurate, and timely internal reporting is available, supported by adequate management information systems.
There is a reliable information system supported by competent human resources and adequate information system security (security system).

b. Governance process

The Infrastructure Financing Company has made financial and non-financial conditions transparent to stakeholders, including announcing public financial publication reports and reporting to the Financial Services Authority or stakeholders in accordance with applicable regulations.
The Infrastructure Financing Company discloses service information of the Infrastructure Financing Company in accordance with applicable regulations, including:
a) written information regarding the products/services of the Infrastructure Financing Company; b) product/service information conveyed in accordance with actual conditions; and c) the Infrastructure Financing Company has informed debtors or consumers if there are changes in product/service information.
The Infrastructure Financing Company discloses information regarding the transparent procedure for complaints by debtors or consumers and dispute resolution to debtors or consumers in accordance with regulations governing complaints by debtors or consumers and mediation by the Infrastructure Financing Company.
The Company prepares and presents reports with procedures, types, and coverage as regulated in statutory regulations.
The Infrastructure Financing Company has prepared reports on the implementation of good corporate governance with content and coverage at least in accordance with applicable regulations.
In the event that the report on the implementation of good corporate governance does not reflect the actual condition of the Company, the Infrastructure Financing Company immediately submits a complete revision to the Financial Services Authority.

c. Governance outcome

Annual financial reports have been submitted completely and on time by the Infrastructure Financing Company to the Financial Services Authority and shareholders of the Infrastructure Financing Company.
Reports on the implementation of good corporate governance reflect the actual condition of the Infrastructure Financing Company or in accordance with the results of the Infrastructure Financing Company's self-assessment and are attached with the results of the self-assessment with coverage in accordance with statutory regulations.
Reports on the implementation of good corporate governance have been submitted completely and on time to the Financial Services Authority and shareholders of the Infrastructure Financing Company.
The Infrastructure Financing Company applies transparency of information regarding products/services.

Strategic Plan of the Infrastructure Financing Company:
a. Governance structure

The Strategic Plan of the Infrastructure Financing Company has been prepared in the form of a business plan in accordance with the vision and mission of the Infrastructure Financing Company.
The Strategic Plan of the Infrastructure Financing Company is fully supported by shareholders, reflected among others in the commitment and efforts of shareholders to strengthen the capital of the Infrastructure Financing Company.

b. Governance process

The Infrastructure Financing Company has prepared the Infrastructure Financing Business Plan realistically, comprehensively, and measurably (achievable), taking into account the principle of prudence and being responsive to internal and external changes.
The Business Plan of the Infrastructure Financing Company is approved by the Board of Commissioners.
The Board of Directors has communicated the Business Plan of the Infrastructure Financing Company to:
a) shareholders of the Infrastructure Financing Company; and b) all levels of the organization within the Infrastructure Financing Company.
The Board of Directors has effectively implemented the Business Plan of the Infrastructure Financing Company.
In the preparation and submission of the Business Plan of the Infrastructure Financing Company, the following have been considered:
a) medium-term and/or long-term plans; b) external and internal factors that can affect the continuity of the business of the Infrastructure Financing Company; c) the principle of prudence; and d) the implementation of risk management.
The Board of Commissioners has conducted supervision over the implementation of the Business Plan of the Infrastructure Financing Company.

c. Governance outcome

The Business Plan of the Infrastructure Financing Company is prepared by the Board of Directors and approved by the Board of Commissioners.
The Business Plan of the Infrastructure Financing Company and its realization have been communicated by the Board of Directors to controlling shareholders and all levels of the organization within the Infrastructure Financing Company.
The Business Plan of the Infrastructure Financing Company describes the sustainable growth of the Infrastructure Financing Company.
The Business Plan of the Infrastructure Financing Company is prepared based on a comprehensive study, taking into account business opportunities and strengths possessed by the Infrastructure Financing Company and identifying weaknesses and threats (strength, weakness, opportunity, threat/SWOT Analysis).
The Business Plan of the Infrastructure Financing Company must be supported by adequate infrastructure preparation, including human resources, information technology, office networks, as well as policies and procedures.

Conclusion:
Based on the analysis of all the assessment criteria or indicators mentioned above, it is concluded that:
A. Governance structure

Strengths of the governance structure aspect of the Infrastructure Financing Company are.....
Weaknesses of the governance structure aspect of the Infrastructure Financing Company are.....
B. Governance process
Strengths of the governance process aspect of the Infrastructure Financing Company are.....
Weaknesses of the governance process aspect of the Infrastructure Financing Company are.....
C. Governance outcome
Strengths of the governance outcome aspect of the Infrastructure Financing Company are.....
Weaknesses of the governance outcome aspect of the Infrastructure Financing Company are.....

Table I.B: Guidelines for Determining the Rating of the Good Corporate Governance Factor
Rating Definition
1 Reflects that the management of the Infrastructure Financing Company has implemented good corporate governance which is generally very good. This is reflected in the very adequate fulfillment of the principles of good corporate governance. In the event there are weaknesses in the implementation of the principles of good corporate governance, generally such weaknesses are not significant and can be immediately improved by the management of the Infrastructure Financing Company. 2 Reflects that the management of the Infrastructure Financing Company has implemented good corporate governance which is generally good. This is reflected in the adequate fulfillment of the principles of good corporate governance. In the event there are weaknesses in the implementation of the principles of good corporate governance, generally such weaknesses are less significant and can be resolved with normal actions by the management of the Infrastructure Financing Company. 3 Reflects that the management of the Infrastructure Financing Company has implemented good corporate governance which is generally quite good. This is reflected in the fairly adequate fulfillment of the principles of good corporate governance. In the event there are weaknesses in the implementation of the principles of good corporate governance, generally such weaknesses are quite significant and require considerable attention from the management of the Infrastructure Financing Company. 4 Reflects that the management of the Infrastructure Financing Company has implemented good corporate governance which is generally less good. This is reflected in the less adequate fulfillment of the principles of good corporate governance. There are weaknesses in the implementation of the principles of good corporate governance, which generally are significant and require comprehensive improvement by the management of the Infrastructure Financing Company. 5 Reflects that the management of the Infrastructure Financing Company has implemented good corporate governance which is generally not good. This is reflected in the inadequate fulfillment of the principles of good corporate governance. There are weaknesses in the implementation of the principles of good corporate governance, which generally are very significant and difficult to improve by the management of the Infrastructure Financing Company.

This copy is in accordance with the original
Legal Director 1
Legal Department signed
Mufli Asmawidjaja

Determined in Jakarta on date 11 November 2021 EXECUTIVE HEAD OF SUPERVISOR OF INSURANCE, PENSION FUNDS, FINANCING INSTITUTIONS, AND OTHER FINANCIAL SERVICES INSTITUTIONS FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA, signed RISWINANDI

APPENDIX II
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA NUMBER 27 /SEOJK.05/2021 REGARDING ASSESSMENT OF THE HEALTH LEVEL OF INFRASTRUCTURE FINANCING COMPANIES

ASSESSMENT OF THE RISK PROFILE FACTOR OF THE HEALTH LEVEL OF INFRASTRUCTURE FINANCING COMPANIES Strategic Risk Assessment
Table II.A.1: Parameters or Indicators for Inherent Risk Assessment for Strategic Risk
Table II.A.2: Guidelines for Determining the Level of Inherent Risk for Strategic Risk
Table II.A.3: Guidelines for Determining the Quality of Risk Management Implementation for Strategic Risk
Operational Risk Assessment
Table II.B.1: Parameters or Indicators for Inherent Risk Assessment for Operational Risk
Table II.B.2: Guidelines for Determining the Level of Inherent Risk for Operational Risk
Table II.B.3: Guidelines for Determining the Quality of Risk Management Implementation for Operational Risk
Credit Risk Assessment
Table II.C.1: Parameters or Indicators for Inherent Risk Assessment for Credit Risk
Table II.C.2: Guidelines for Determining the Level of Inherent Risk for Credit Risk
Table II.C.3: Guidelines for Determining the Quality of Risk Management Implementation for Credit Risk
Market Risk Assessment
Table II.D.1: Parameters or Indicators for Inherent Risk Assessment for Market Risk
Table II.D.2: Guidelines for Determining the Level of Inherent Risk for Market Risk
Table II.D.3: Guidelines for Determining the Quality of Risk Management Implementation for Market Risk
Liquidity Risk Assessment
Table II.E.1: Parameters or Indicators for Inherent Risk Assessment for Liquidity Risk
Table II.E.2: Guidelines for Determining the Level of Inherent Risk for Liquidity Risk
Table II.E.3: Guidelines for Determining the Quality of Risk Management Implementation for Liquidity Risk
Legal Risk Assessment
Table II.F.1: Parameters or Indicators for Inherent Risk Assessment for Legal Risk
Table II.F.2: Guidelines for Determining the Level of Inherent Risk for Legal Risk
Table II.F.3: Guidelines for Determining the Quality of Risk Management Implementation for Legal Risk
Compliance Risk Assessment
Table II.G.1: Parameters or Indicators for Inherent Risk Assessment for Compliance Risk
Table II.G.2: Guidelines for Determining the Level of Inherent Risk for Compliance Risk
Table II.G.3: Guidelines for Determining the Quality of Risk Management Implementation for Compliance Risk
Reputational Risk Assessment
Table II.H.1: Parameters or Indicators for Inherent Risk Assessment for Reputational Risk
Table II.H.2: Guidelines for Determining the Level of Inherent Risk for Reputational Risk
Table II.H.3: Guidelines for Determining the Quality of Risk Management Implementation for Reputational Risk
Table II.I: Guidelines for Determining the Risk Level for Each Type of Risk
Table II.J: Format for Determining the Risk Profile Rating 118
Table II.K: Guidelines for Determining the Rating of the Risk Profile Factor 119

Filling Instructions:

The Infrastructure Financing Company conducts the assessment of the Health Level of the Infrastructure Financing Company and UUS using a risk-based approach individually with the scope of assessment on the risk profile factor according to Appendix II.
The parameters or indicators for assessing the risk profile factor in Appendix II are minimum standards that must be used in conducting the assessment of the risk profile factor.
The Infrastructure Financing Company may add other parameters or indicators in accordance with the characteristics and complexity of the business of the Infrastructure Financing Company.
The assessment is conducted per position and period for the last 12 (twelve) months for parameters or indicators that are quantitative.
For certain parameters or indicators, the assessment can be conducted by considering trends for at least a period of 3 (three) years.
In assessing the risk profile factor of the Infrastructure Financing Company on a consolidated basis, the parameters or indicators for assessing the risk profile factor of the Infrastructure Financing Company individually can be used, adjusted to the scale, characteristics, and complexity of the business of the Subsidiary Company.
Parameters apply to the entire Infrastructure Financing Company and UUS, unless stated otherwise.

Table II.A.1: Parameters or Indicators for Inherent Risk Assessment for Strategic Risk
Parameter or Indicator Description

Alignment of business strategy with the vision and mission of the Infrastructure Financing Company and business environment conditions
a. Stages or mechanisms for formulating strategic plans by the Board of Directors Assessment of the parameter includes availability of formulation procedures. b. Board of Directors' understanding of the entire strategic plan of the Infrastructure Financing Company Clear enough.
c. Process of the Infrastructure Financing Company in formulating business strategy and changes in business strategy carried out (if any)
Clear enough. d. Alternative strategies (contingent/emergent strategy) in the event of changes in the business environment that have been anticipated Clear enough. e. Determination of strategic objectives needs to consider internal and external business factors of the Infrastructure Financing Company:
Internal factors, including:

vision, mission, and business direction to be achieved by the Infrastructure Financing Company;
organizational culture, especially in the determination of strategic objectives requiring changes in organizational structure and adjustment of business processes;
organizational capability factors including among others human resources, infrastructure, office networks, and management information systems; and
risk tolerance level, which is the financial ability of the Infrastructure Financing Company to absorb risk.
External factors, including:
macroeconomic conditions;
technological development; and
level of business competition.
Assessment of the parameter includes measuring whether the determination of strategic targets by the Board of Directors is supported by internal and external conditions of the business environment of the Infrastructure Financing Company.

Choice of business strategy level, i.e., high-risk strategy and low-risk strategy
Choice of strategy by the Infrastructure Financing Company whether it tends to use high-risk strategies or low-risk strategies

High-risk strategy is a strategy where the Infrastructure Financing Company plans to enter new business areas, whether market share, products or services, or new customers.
Low-risk strategy is a strategy where the Infrastructure Financing Company conducts business activities in previously known market shares and customers or provides products that are traditional so that the level of business growth tends to be stable and predictable.

Strategic position of the Company
a. Market where the Infrastructure Financing Company conducts business activities Clear enough. b. Competitive advantages possessed by the Infrastructure Financing Company compared to competitors Clear enough.
c. Reputation of the Infrastructure Financing Company
Clear enough. d. Readiness of the Infrastructure Financing Company to face macroeconomic changes and their impact on the condition of the Infrastructure Financing Company, including interest rates, inflation, and exchange rates Clear enough. e. Strategy of the Infrastructure Financing Company in maintaining or increasing its strategic position in the market to be carried out by the Infrastructure Financing Company, whether business activities, operational coverage area, or others Clear enough.
Achievement of realization of the plan of the Infrastructure Financing Company
a. Level of deviation between strategic targets and achievement results of the Infrastructure Financing Company The purpose of the assessment is to measure how large the deviation of business plan realization is compared to the targets in the business plan. b. Documentation of the causes of business plan deviation. Clear enough.

Table II.A.2: Guidelines for Determining Inherent Risk Level for Strategic Risk

Rating	Definition
Rating 1 (Low)	Considering the business activities conducted by the Infrastructure Financing Company, the likelihood of losses faced by the Infrastructure Financing Company from strategic risk is classified as very low during a certain period in the future.<br><br>Examples of characteristics of Infrastructure Financing Companies included in Rating 1 (low) include the following:<br>a. The Infrastructure Financing Company continues existing strategies in accordance with business environment conditions with a high level of strategy success;<br>b. the Infrastructure Financing Company's strategy is classified as conservative or very low risk;<br>c. the Infrastructure Financing Company's products and/or activities are classified as stable, not complex, and diversified;<br>d. the Infrastructure Financing Company has a stable competitive advantage and there are no threats from competitors; and<br>e. business plan achievement is very adequate.<br><br>Rating 2 (Low-Medium)	Considering the business activities conducted by the Infrastructure Financing Company, the likelihood of losses faced by the Infrastructure Financing Company from strategic risk is classified as low during a certain period in the future.<br><br>Examples of characteristics of Infrastructure Financing Companies included in Rating 2 (low-medium) include the following:<br>a. the Infrastructure Financing Company continues the same strategy or has several new strategies in accordance with business environment conditions but still within the core business and competence of the Infrastructure Financing Company;<br>b. the Infrastructure Financing Company's strategy is classified as low risk;<br>c. the Infrastructure Financing Company's products and/or activities are classified as not complex and diversified;<br>d. the Infrastructure Financing Company has a competitive advantage and competitor threats are classified as minor; and<br>e. business plan achievement is adequate.<br><br>Rating 3 (Medium)	Considering the business activities conducted by the Infrastructure Financing Company, the likelihood of losses faced by the Infrastructure Financing Company from strategic risk is classified as moderately high during a certain period in the future.<br><br>Examples of characteristics of Infrastructure Financing Companies included in Rating 3 (medium) include the following:<br>a. the Infrastructure Financing Company implements new strategies to enter new businesses or markets in accordance with business environment conditions but still within the core business and competence of the Infrastructure Financing Company;<br>b. the Infrastructure Financing Company's strategy is classified as moderately high risk;<br>c. the Infrastructure Financing Company's products and/or activities are generally diversified, but some are classified as complex;<br>d. the Infrastructure Financing Company has a moderate competitive advantage and there are threats from competitors; and<br>e. business plan
achievement is moderately adequate.<br><br>Rating 4 (Medium-High)	Considering the business activities conducted by the Infrastructure Financing Company, the likelihood of losses faced by the Infrastructure Financing Company from strategic risk is classified as high during a certain period in the future.<br><br>Examples of characteristics of Infrastructure Financing Companies included in Rating 4 (medium-high) include the following:<br>a. the Infrastructure Financing Company implements strategies to enter new businesses or markets in accordance with business environment conditions with an uncertain level of success;<br>b. the Infrastructure Financing Company's strategy is classified as high risk;<br>c. some of the Infrastructure Financing Company's products and/or activities are concentrated and classified as complex;<br>d. the Infrastructure Financing Company lacks competitive advantage, or there are significant threats from competitors; and<br>e. business plan achievement is less adequate.<br><br>Rating 5 (High)	Considering the business activities conducted by the Infrastructure Financing Company, the likelihood of losses faced by the Infrastructure Financing Company from strategic risk is classified as very high during a certain period in the future.<br><br>Examples of characteristics of Infrastructure Financing Companies included in Rating 5 (high) include the following:<br>a. the majority of the Infrastructure Financing Company's strategies shift to areas that are different and not the main business lines and competence in accordance with the Infrastructure Financing Company's business environment conditions;<br>b. the Infrastructure Financing Company's strategy is classified as very high risk;<br>c. the Infrastructure Financing Company's products and/or business activities are very concentrated and classified as complex;<br>d. the Infrastructure Financing Company has no competitive advantage and there are very significant threats from competitors; and<br>e. the Infrastructure Financing Company's business plan achievement is inadequate.

Table II.A.3: Guidelines for Determining Risk Management Implementation Quality for Strategic Risk

Rating	Definition
Rating 1 (Strong)	The quality of risk management implementation for strategic risk is very adequate, with minor weaknesses that are not significant and can be ignored.<br><br>Examples of characteristics of Infrastructure Financing Companies included in Rating 1 (strong) include the following:<br>a. the formulation of risk appetite and risk tolerance is very adequate and has aligned with overall strategic objectives and business strategy;<br>b. the Board of Directors, Board of Commissioners, and/or DPS have very good awareness and understanding regarding risk management for strategic risk, sources of strategic risk, and the level of strategic risk at the Infrastructure Financing Company;<br>c. the risk management culture for strategic risk is very strong and has been internalized very well at all organizational levels;<br>d. the execution of duties by the Board of Directors, Board of Commissioners, and/or DPS is overall very adequate;<br>e. the risk management function for strategic risk is independent, has clear duties and responsibilities, and has operated very well;<br>f. delegation of authority is controlled and monitored periodically, and has operated very well;<br>g. management strategy for strategic risk is very aligned with the risk appetite and strategic risk tolerance;<br>h. policies, procedures, and limit setting for strategic risk are very adequate and available for all areas of risk management for strategic risk, aligned with implementation, and well understood by employees;<br>i. the risk management process for strategic risk is very adequate in identifying, measuring, monitoring, and controlling strategic risk;<br>j. the strategic risk management information system is very good, thereby producing strategic risk reports that are useful for the Board of Directors, Board of Commissioners, and/or DPS;<br>k. human resources are very adequate in terms of quantity and quality in the risk management function for strategic risk;<br>l. the internal control system is very effective in supporting the implementation of risk management for strategic risk;<br>m. the execution of independent review by the internal audit unit and functions conducting independent review is very adequate in terms of methodology, frequency, and reporting to the Board of Directors, Board of Commissioners, and/or DPS;<br>n. generally, there are no significant weaknesses based on independent review results; and<br>o. follow-up on independent review has been executed very adequately.<br><br>Rating 2 (Fairly Strong)	The quality of risk management implementation for strategic risk is adequate despite having some minor weaknesses that can be resolved in normal business activities.<br><br>Examples of characteristics of Infrastructure Financing Companies included in Rating 2 (fairly strong) include the following:<br>a. the formulation of risk appetite and risk tolerance is adequate and has aligned with overall strategic objectives and business strategy;<br>b. the
Board of Directors, Board of Commissioners, and/or DPS have good awareness and understanding regarding risk management for strategic risk, sources of strategic risk, and the level of strategic risk at the Infrastructure Financing Company;<br>c. the risk management culture for strategic risk is strong and has been internalized well at all organizational levels;<br>d. the execution of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally adequate, with some weaknesses that are not significant and can be improved immediately;<br>e. the risk management function for strategic risk has clear duties and responsibilities and has operated well, but there are minor weaknesses that can be resolved in normal business activities;<br>f. delegation of authority is controlled and monitored periodically, and has operated well;<br>g. management strategy for strategic risk is aligned with the risk appetite and strategic risk tolerance;<br>h. policies, procedures, and limit setting for strategic risk are adequate and available for all areas of risk management for strategic risk, aligned with implementation, and well understood by employees despite minor weaknesses;<br>i. the risk management process for strategic risk is adequate in identifying, measuring, monitoring, and controlling strategic risk;<br>j. the strategic risk management information system is good, including strategic risk reporting to the Board of Directors, Board of Commissioners, and/or DPS, but there are minor weaknesses that can be easily improved;<br>k. human resources are adequate in terms of quantity and quality in the risk management function for strategic risk;<br>l. the internal control system is effective in supporting the implementation of risk management for strategic risk;<br>m. the execution of independent review by the internal audit unit and functions conducting independent review is adequate in terms of methodology, frequency, and reporting to the Board of Directors, Board of Commissioners, and/or DPS;<br>n. there are weaknesses but not significant based on independent review results; and<br>o. follow-up on independent review has been executed adequately.<br><br>Rating 3 (Sufficient)	The quality of risk management implementation for strategic risk is sufficiently adequate. Although minimum requirements are met, there are some weaknesses that require management attention.<br><br>Examples of characteristics of Infrastructure Financing Companies included in Rating 3 (sufficient) include the following:<br>a. the formulation of risk appetite and risk tolerance is sufficiently adequate but not always aligned with overall strategic objectives and business strategy;<br>b. the Board of Directors, Board of Commissioners, and/or DPS have sufficiently good awareness and understanding regarding risk management for strategic risk, sources of strategic risk, and the level of strategic risk at the Infrastructure Financing Company;<br>c. the risk management culture
for strategic risk is sufficiently strong and has been internalized sufficiently well but not always implemented consistently;<br>d. the execution of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally sufficiently adequate, but there are weaknesses in some assessment aspects that need management attention;<br>e. the risk management function for strategic risk is sufficiently good, but there are some weaknesses including reporting to the Board of Directors, Board of Commissioners, and/or DPS that require management attention;<br>f. delegation of authority is sufficiently good, but control and monitoring are not always executed well;<br>g. management strategy for strategic risk is sufficiently aligned with the risk appetite and strategic risk tolerance;<br>h. policies, procedures, and limit setting for strategic risk are sufficiently adequate but not always consistent with implementation;<br>i. the risk management process for strategic risk is sufficiently adequate in identifying, measuring, monitoring, and controlling strategic risk;<br>j. the strategic risk management information system meets minimum expectations but has some weaknesses including reporting to the Board of Directors, Board of Commissioners, and/or DPS that require management attention;<br>k. human resources are sufficiently adequate in terms of quantity and quality in the risk management function for strategic risk;<br>l. the internal control system is sufficiently effective in supporting the implementation of risk management for strategic risk;<br>m. the execution of independent review by the internal audit unit and functions conducting independent review is sufficiently adequate, but there are some weaknesses in methodology, frequency, and/or reporting to the Board of Directors, Board of Commissioners, and/or DPS that require management attention;<br>n. there are weaknesses that are sufficiently significant based on independent review results that require management attention; and<br>o. follow-up on independent review has been executed sufficiently adequately.<br><br>Rating 4 (Fairly Weak)	The quality of risk management implementation for strategic risk is less adequate, with significant weaknesses in various aspects of risk management for strategic risk that require immediate corrective action.<br><br>Examples of characteristics of Infrastructure Financing Companies included in Rating 4 (fairly weak) include the following:<br>a. the formulation of risk appetite and risk tolerance is less adequate and not aligned with overall strategic objectives and business strategy;<br>b. there are significant weaknesses in the awareness and understanding of the Board of Directors, Board of Commissioners, and/or DPS regarding risk management for strategic risk, sources of strategic risk, and the level of strategic risk at the Infrastructure Financing Company;<br>c. the risk management culture for strategic risk is not strong and has not been internalized
well at each organizational level;<br>d. the execution of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally less adequate, with weaknesses in various assessment aspects that require immediate improvement;<br>e. there are significant weaknesses in the risk management function for strategic risk that require immediate improvement;<br>f. delegation of authority is weak, not controlled and not monitored well;<br>g. management strategy for strategic risk is not aligned with the risk appetite and strategic risk tolerance;<br>h. there are significant weaknesses in policies, procedures, and limit setting for strategic risk;<br>i. the risk management process for strategic risk is less adequate in identifying, measuring, monitoring, and controlling strategic risk;<br>j. there are significant weaknesses in the strategic risk management information system including reporting to the Board of Directors, Board of Commissioners, and/or DPS that require immediate improvement;<br>k. human resources are less adequate in terms of quantity and quality in the risk management function for strategic risk;<br>l. the internal control system is less effective in supporting the implementation of risk management for strategic risk;<br>m. the execution of independent review by the internal audit unit and functions conducting independent review is less adequate, with weaknesses in methodology, frequency, and/or reporting to the Board of Directors, Board of Commissioners, and/or DPS that require immediate improvement;<br>n. there are significant weaknesses based on independent review results that require immediate corrective action; and<br>o. follow-up on independent review is less adequate.<br><br>Rating 5 (Weak)	The quality of risk management implementation for strategic risk is inadequate, with significant weaknesses in various aspects of risk management for strategic risk whose resolution is beyond management's capability.<br><br>Examples of characteristics of Infrastructure Financing Companies included in Rating 5 (weak) include the following:<br>a. the formulation of risk appetite and risk tolerance is inadequate and there is no connection with overall strategic objectives and business strategy;<br>b. the awareness and understanding of the Board of Directors, Board of Commissioners, and/or DPS regarding risk management for strategic risk, sources of strategic risk, and the level of strategic risk at the Infrastructure Financing Company is very weak;<br>c. the risk management culture for strategic risk is not strong or does not exist at all;<br>d. the execution of duties by the Board of Directors, Board of Commissioners, and/or DPS is inadequate, with significant weaknesses in almost all assessment aspects and the resolution is beyond the Infrastructure Financing Company's capability;<br>e. there are significant weaknesses in the risk management function for strategic risk that require fundamental improvement;<br>f. delegation of
authority is very weak or non-existent;<br>g. management strategy for strategic risk is not aligned with the risk appetite and strategic risk tolerance;<br>h. there are very significant weaknesses in policies, procedures, and limit setting for strategic risk;<br>i. the risk management process for strategic risk is inadequate in identifying, measuring, monitoring, and controlling strategic risk;<br>j. there are fundamental weaknesses in the strategic risk management information system;<br>k. human resources are inadequate in terms of quantity and quality in the risk management function for strategic risk;<br>l. the internal control system is ineffective in supporting the implementation of risk management for strategic risk;<br>m. the execution of independent review by the internal audit unit and functions conducting independent review is less or inadequate, with weaknesses in methodology, frequency, and/or reporting to the Board of Directors, Board of Commissioners, and/or DPS that require fundamental improvement;<br>n. there are very significant weaknesses based on independent review results whose corrective actions are beyond management's capability; and<br>o. follow-up on independent review is inadequate.

Table II.B.1: Parameters or Indicators for Assessing Inherent Risk for Operational Risk

Parameter or Indicator	Description
1. Organizational and Business Activity Complexity	a. Size, complexity, and organizational structure: High business complexity and the level of product diversity of the Infrastructure Financing Company will cause complexity and variation in work processes, both manual and automated, thereby potentially causing operational disruptions or losses.<br>b. Business process complexity and product/service diversity<br>c. Corporate action<br>d. New business development<br>e. Partial delegation of work execution to third parties (outsourcing)<br>f. Significant changes in work patterns<br>g. History of transaction process failures or management process failures
2. Human Resources	a. Human resource management implementation: Ineffective human resource management can result in the potential for operational disruptions or losses for the Infrastructure Financing Company. Assessment can be conducted based on:<br>1) percentage of human resource fulfillment in the organizational structure;<br>2) employee turnover rate; and<br>3) budgeting and realization of education and training costs against the human resource budget.<br>b. Failures due to human factors (human error)
3. Technology and Information Systems	a. Information technology system complexity: Inadequate information technology and/or ineffective and inefficient management can cause losses to the Infrastructure Financing Company. Assessment can be conducted based on the number of system disruptions for internal and external purposes in 1 (one) year.<br>b. Changes in information technology systems<br>c. Maturity of information technology systems<br>d. Reliability of information systems, including supporting infrastructure, against information technology threats and attacks<br>e. Suitability of information technology systems with Infrastructure Financing Company activities<br>f. Information technology system failures
4. Fraud Risk	a. History of internal fraud: Fraud assessment is conducted against the frequency or materiality of fraud that has occurred in previous assessment periods, including potential fraud that may arise from weaknesses in business aspects, human resources, information technology, and external events.<br>b. History of external fraud
5. Business and Organizational Disruption	a. Frequency and materiality of external events: External events include terrorism, criminality, pandemics, and natural disasters. The location and geographical conditions of the Infrastructure Financing Company include the number and significance of services in disaster-prone areas, social conflicts, criminality, and terrorism.<br>b. Location and geographical conditions of the Infrastructure Financing Company
6. Level of Interaction and Dependency of Infrastructure Financing Company	a. Level of interaction and dependency of the Infrastructure Financing Company against affiliated companies in main business activities: Self-explanatory.<br>b. Level of interaction and dependency of the Infrastructure Financing Company against non-affiliated companies in main business activities<br>c. Impact of interaction and dependency of the Infrastructure Financing Company against affiliated and non-affiliated companies on financial performance

Table II.B.2: Guidelines for Determining Inherent Risk Level for Operational Risk

Rating	Definition	Rating
Rating 1 (Low)	Considering the business activities conducted by the Infrastructure Financing Company, the likelihood of losses faced by the Infrastructure Financing Company from operational risk is classified as very low during a certain period in the future.
Examples of characteristics of Infrastructure Financing Companies included in Rating 1 (Low) include the following:
a.	The Infrastructure Financing Company's business has very simple characteristics: products and activities are not varied, business mechanisms are very simple, transaction volume is low, organizational structure is not complex, there are no significant corporate actions, and the use of outsourcing is very minimal;
b.	Human resources are very adequate, both in terms of quantity and quality adequacy of human resources and historical data on losses due to human error are not significant;
c.	Information technology is very mature and there are no significant changes in the information technology system, information technology vulnerability to disruptions or attacks is very low, supporting infrastructure is very reliable in supporting the Infrastructure Financing Company's business;
d.	The frequency and materiality of internal and external fraud are very low and losses caused are not significant compared to the transaction volume or revenue of the Infrastructure Financing Company;
e.	The threat of business disruption as a result of external events is very low; and
f.	Dependence and the impact of dependence on affiliated and unaffiliated companies in main business activities are very low.
Rating 2 (Low-Medium)	Considering the business activities conducted by the Infrastructure Financing Company, the likelihood of losses faced by the Infrastructure Financing Company from operational risk is low during a certain period in the future.
Examples of characteristics of Infrastructure Financing Companies included in Rating 2 (Low-Medium) include the following:
a.	The Infrastructure Financing Company's business has simple characteristics: products and activities are relatively less varied, business mechanisms are simple, transaction volume is relatively low, organizational structure is less complex, corporate actions are less significant, and the use of outsourcing is minimal;
b.	Human resources are adequate, both in terms of quantity and quality adequacy of human resources and historical data on losses due to human error are less significant;
c.	Information technology is relatively mature and there are no significant changes in the information technology system, information technology vulnerability to disruptions or attacks is low, supporting infrastructure is reliable in supporting the Infrastructure Financing Company's business;
d.	The frequency and materiality of internal and external fraud are low and losses caused are less significant compared to the transaction volume or revenue of the Infrastructure Financing Company;
e.	The threat of business disruption as a result of external events is low; and
f.	Dependence and the impact of dependence on affiliated and unaffiliated companies in main business activities are low.
Rating 3 (Medium)	Considering the business activities conducted by the Infrastructure Financing Company, the likelihood of losses faced by the Infrastructure Financing Company from operational risk is classified as quite high during a certain period in the future.
Examples of characteristics of Infrastructure Financing Companies included in Rating 3 (Medium) include the following:
a.	The Infrastructure Financing Company's business has quite complex characteristics, products and activities are quite varied, business mechanisms are quite complex, transaction volume is quite high, organizational structure is quite complex, corporate actions are quite significant, and the use of outsourcing is quite significant;
b.	Human resources are quite adequate, both in terms of quantity and quality adequacy of human resources and historical data on losses due to human error are quite significant;
c.	Information technology is moving towards maturity and there may be significant changes in the information technology system, information technology is quite vulnerable to disruptions or attacks, supporting infrastructure is quite reliable in supporting the Infrastructure Financing Company's business;
d.	The frequency and materiality of internal and external fraud are quite high and losses caused are quite significant compared to the transaction volume or revenue of the Infrastructure Financing Company;
e.	The threat of business disruption as a result of external events is quite high; and
f.	Dependence and the impact of dependence on affiliated and unaffiliated companies in main business activities are quite high.
Rating 4 (Medium-High)	Considering the business activities conducted by the Infrastructure Financing Company, the likelihood of losses faced by the Infrastructure Financing Company from operational risk is classified as high during a certain period in the future.
Examples of characteristics of Infrastructure Financing Companies included in Rating 4 (Medium-High) include the following:
a.	The Infrastructure Financing Company's business has complex characteristics: products and activities are varied, business mechanisms are complex, transaction volume is high, organizational structure is complex, corporate actions are significant, and the use of outsourcing is significant.
b.	Human resources are less adequate, both in terms of quantity and quality adequacy, historical data on losses due to human error are significant;
c.	Information technology is not yet mature and there are significant changes in the information technology system, information technology is vulnerable to disruptions or attacks, supporting infrastructure is less reliable in supporting the Infrastructure Financing Company's business;
d.	The frequency and materiality of internal and external fraud are high and losses caused are significant compared to the transaction volume or revenue;
e.	The threat of business disruption as a result of external events is high; and
f.	Dependence and the impact of dependence on affiliated and unaffiliated companies in main business activities are high.
Rating 5 (High)	Considering the business activities conducted by the Infrastructure Financing Company, the likelihood of losses faced by the Infrastructure Financing Company from operational risk is classified as very high during a certain period in the future.
Examples of characteristics of Infrastructure Financing Companies included in Rating 5 (High) include the following:
a.	The Infrastructure Financing Company's business has very complex characteristics: products and activities are very varied, business mechanisms are very complex, transaction volume is very high, organizational structure is very complex, corporate actions are significant, and the use of outsourcing is very high;
b.	Human resources are inadequate, both in terms of quantity and quality adequacy, historical data on losses due to human error are very significant;
c.	Information technology is not yet mature and there are very significant changes in the information technology system, information technology is very vulnerable to disruptions or attacks, supporting infrastructure is not reliable in supporting the Infrastructure Financing Company's business;
d.	The frequency and materiality of internal and external fraud are very high and losses caused are very significant compared to the transaction volume or revenue of the Infrastructure Financing Company;
e.	The threat of business disruption as a result of external events is very high; and
f.	Dependence and the impact of dependence on affiliated and unaffiliated companies in main business activities are very high.

Table II.B.3: Guidelines for Determining the Quality of Risk Management Implementation for Operational Risk

Rating	Definition	Rating
Rating 1 (Strong)	The quality of risk management implementation for operational risk is very adequate, with minor weaknesses that are not significant and can be ignored.
Examples of characteristics of Infrastructure Financing Companies included in Rating 1 (Strong) include the following:
a.	Formulation of the level of risk to be taken (risk appetite) and risk tolerance is very adequate and has aligned with overall strategic objectives and business strategy;
b.	The Board of Directors, Board of Commissioners, and/or DPS have very good awareness and understanding regarding risk management for operational risk, operational risk sources, and the level of operational risk at the Infrastructure Financing Company;
c.	Risk management culture for operational risk is very strong and has been internalized very well at all organizational levels;
d.	The execution of duties by the Board of Directors, Board of Commissioners, and/or DPS as a whole is very adequate;
e.	The risk management function for operational risk is independent, has clear tasks and responsibilities, and has operated very well;
f.	Delegation of authority is controlled and monitored periodically, and has operated very well;
g.	Management strategy for operational risk is very aligned with the level of risk to be taken and operational risk tolerance;
h.	Policies, risk management procedures, and the setting of limits for operational risk are very adequate and available for all risk management areas for operational risk, aligned with implementation, and well understood by employees;
i.	The risk management process for operational risk is very adequate in identifying, measuring, monitoring, and controlling operational risk;
j.	Business continuity management is very reliable and very tested;
k.	The information management system for operational risk is very good, producing comprehensive and integrated operational risk reports to the Board of Directors, Board of Commissioners, and/or DPS;
l.	Human resources are very adequate in terms of quantity and quality in the risk management function for operational risk;
m.	The internal control system is very effective in supporting the implementation of risk management for operational risk;
n.	The implementation of independent review by the internal audit work unit and functions performing independent review is very adequate in terms of methodology, frequency, and reporting to the Board of Directors, Board of Commissioners, and/or DPS;
o.	Generally, there are no significant weaknesses based on independent review results; and
p.	Follow-up on independent review has been implemented very adequately.
Rating 2 (Fairly Strong)	The quality of risk management implementation for operational risk is adequate although there are some minor weaknesses that can be resolved in normal business activities.
Examples of characteristics of Infrastructure Financing Companies included in Rating 2 (Fairly Strong) include the following:
a.	Formulation of the level of risk to be taken (risk appetite) and risk tolerance is adequate and has aligned with overall strategic objectives and business strategy;
b.	The Board of Directors, Board of Commissioners, and/or DPS have good awareness and understanding regarding risk management for operational risk, operational risk sources, and the level of operational risk at the Infrastructure Financing Company;
c.	Risk management culture for operational risk is strong and has been internalized well at all organizational levels;
d.	The execution of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally adequate, with some weaknesses that are not significant and can be repaired immediately;
e.	The risk management function for operational risk has clear tasks and responsibilities and has operated well, but there are minor weaknesses that can be resolved in normal business activities;
f.	Delegation of authority is controlled and monitored periodically, and has operated well, but there are minor weaknesses that can be resolved in normal business activities;
g.	Management strategy for operational risk is aligned with the level of risk to be taken and operational risk tolerance;
h.	Policies, procedures, and the setting of limits for operational risk are adequate and available for all risk management areas for operational risk, aligned with implementation, and well understood by employees although there are minor weaknesses;
i.	The risk management process for operational risk is adequate in identifying, measuring, monitoring, and controlling operational risk;
j.	Business continuity management is reliable and tested;
k.	The information management system for operational risk is good, including operational risk reporting to the Board of Directors, Board of Commissioners, and/or DPS, but there are minor weaknesses that can be easily repaired;
l.	Human resources are adequate in terms of quantity and quality in the risk management function for operational risk;
m.	The internal control system is effective in supporting the implementation of risk management for operational risk;
n.	The implementation of independent review by the internal audit work unit and functions performing independent review is adequate in terms of methodology, frequency, and reporting to the Board of Directors, Board of Commissioners, and/or DPS;
o.	There are weaknesses but not significant based on independent review results; and
p.	Follow-up on independent review has been implemented adequately.
Rating 3 (Sufficient)	The quality of risk management implementation for operational risk is quite adequate. Although minimum requirements are met, there are some weaknesses that require management attention.
Examples of characteristics of Infrastructure Financing Companies included in Rating 3 (Sufficient) include the following:
a.	Formulation of the level of risk to be taken (risk appetite) and risk tolerance is quite adequate but not always aligned with overall strategic objectives and business strategy;
b.	The Board of Directors, Board of Commissioners, and/or DPS have quite good awareness and understanding regarding risk management for operational risk, operational risk sources, and the level of operational risk at the Infrastructure Financing Company;
c.	Risk management culture for operational risk is quite strong and has been internalized quite well but not always implemented consistently;
d.	The execution of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally quite adequate, but there are weaknesses in some assessment aspects that need management attention;
e.	The risk management function for operational risk is quite good, but there are some weaknesses including reporting to the Board of Directors, Board of Commissioners, and/or DPS that require management attention;
f.	Delegation of authority is quite good, but control and monitoring are not always implemented well;
g.	Management strategy for operational risk is quite aligned with the level of risk to be taken and operational risk tolerance;
h.	Policies, procedures, and the setting of limits for operational risk are quite adequate but not always consistent with implementation;
i.	The risk management process for operational risk is quite adequate in identifying, measuring, monitoring, and controlling operational risk;
j.	Business continuity management is quite reliable;
k.	The information management system for operational risk meets minimum expectations but there are some weaknesses including reporting to the Board of Directors, Board of Commissioners, and/or DPS that require management attention;
l.	Human resources are quite adequate in terms of quantity and quality in the risk management function for operational risk;
m.	The internal control system is quite effective in supporting the implementation of risk management for operational risk;
n.	The implementation of independent review by the internal audit work unit and functions performing independent review is quite adequate, but there are some weaknesses in methodology, frequency, and/or reporting to the Board of Directors, Board of Commissioners, and/or DPS that require management attention;
o.	There are weaknesses that are quite significant based on independent review results that require management attention; and
p.	Follow-up on independent review has been implemented quite adequately.
Rating 4 (Fairly Weak)	The quality of risk management implementation for operational risk is less adequate, with significant weaknesses in various aspects of risk management for operational risk that require immediate corrective action.
Examples of characteristics of Infrastructure Financing Companies included in Rating 4 (Fairly Weak) include the following:
a.	Formulation of the level of risk to be taken (risk appetite) and risk tolerance is less adequate and not aligned with overall strategic objectives and business strategy;
b.	There are significant weaknesses in the awareness and understanding of the Board of Directors, Board of Commissioners, and/or DPS regarding risk management for operational risk, operational risk sources, and the level of operational risk at the Infrastructure Financing Company;
c.	Risk management culture for operational risk is not strong and has not been internalized well at each organizational level;
d.	The execution of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally less adequate, with weaknesses in various assessment aspects that require immediate improvement;
e.	There are significant weaknesses in the risk management function for operational risk that require immediate improvement;
f.	Delegation of authority is weak, not controlled and not monitored well;
g.	Management strategy for operational risk is less aligned with the level of risk to be taken and operational risk tolerance;
h.	There are significant weaknesses in policies, procedures, and the setting of limits for operational risk;
i.	The risk management process for operational risk is less adequate in identifying, measuring, monitoring, and controlling operational risk;
j.	Business continuity management is less reliable;
k.	There are significant weaknesses in the information management system for operational risk including reporting to the Board of Directors, Board of Commissioners, and/or DPS that require immediate improvement;
l.	Human resources are less adequate in terms of quantity and quality in the risk management function for operational risk;
m.	The internal control system is less effective in supporting the implementation of risk management for operational risk;
n.	The implementation of independent review by the internal audit work unit and functions performing independent review is less adequate, with weaknesses in methodology, frequency, and/or reporting to the Board of Directors, Board of Commissioners, and/or DPS that require immediate improvement;
o.	There are significant weaknesses based on independent review results that require immediate corrective action; and
p.	Follow-up on independent review is less adequate.
Rating 5 (Weak)	The quality of risk management implementation for operational risk is inadequate, with significant weaknesses in various aspects of risk management for operational risk whose resolution is beyond management's capability.
Examples of characteristics of Infrastructure Financing Companies included in Rating 5 (Weak) include the following:
a.	Formulation of the level of risk to be taken (risk appetite) and risk tolerance is inadequate and there is no connection with overall strategic objectives and business strategy;
b.	The awareness and understanding of the Board of Directors, Board of Commissioners, and/or DPS regarding risk management for operational risk, operational risk sources, and the level of operational risk at the Infrastructure Financing Company is very weak;
c.	Risk management culture for operational risk is not strong or does not exist at all;
d.	The execution of duties by the Board of Directors, Board of Commissioners, and/or DPS is inadequate, with significant weaknesses in almost all assessment aspects and actions and their resolution are beyond the Infrastructure Financing Company's capability;
e.	There are significant weaknesses in the risk management function for operational risk that require fundamental improvement;
f.	Delegation of authority is very weak or non-existent;
g.	Management strategy for operational risk is not aligned with the level of risk to be taken and operational risk tolerance;
h.	There are very significant weaknesses in policies, procedures, and the setting of limits for operational risk;
i.	The risk management process for operational risk is inadequate in identifying, measuring, monitoring, and controlling operational risk;
j.	Business continuity management is not reliable;
k.	There are fundamental weaknesses in the information management system for operational risk;
l.	Human resources are inadequate in terms of quantity and quality in the risk management function for operational risk;
m.	The internal control system is not effective in supporting the implementation of risk management for operational risk;
n.	The implementation of independent review by the internal audit work unit and functions performing independent review is less or inadequate, with weaknesses in methodology, frequency, and/or reporting to the Board of Directors, Board of Commissioners, and/or DPS that require fundamental improvement;
o.	There are very significant weaknesses based on independent review results whose corrective actions
p.	Follow-up on independent review is inadequate.

Table II.C.1: Parameters or Indicators for Assessing Inherent Risk for Credit Risk

Parameter or Indicator	Description
1. Financing Distribution Strategy	a. Financing Strategy and Products<br>The term strategy and products refers to the current strategy and/or changes in financing distribution strategy and/or product marketing strategy that have the potential to increase credit risk exposure at the Infrastructure Financing Company/Infrastructure Financing Company Syariah/UUS.<br><br>b. Financing Distribution Process, Competition Level, and Asset Growth Level<br>A high level of competition and aggressive asset growth generally can drive an aggressive financing distribution strategy. The more aggressive the financing distribution strategy, the higher the inherent risk level faced by the Infrastructure Financing Company/Infrastructure Financing Company Syariah/UUS if not accompanied by adequate financing distribution standards.
2. Composition of Financing Receivable Portfolio and Concentration Level	a. Ratio of Financing Receivables to Core Debtors to Total Financing<br>1) For Infrastructure Financing Companies:<br>Total Outstanding Financing Receivables to Core Debtors / Total Outstanding Financing Receivables
---	---

Parameter or Indicator	Description

For Infrastructure Financing Companies that conduct all business activities based on Sharia Principles (Sharia Infrastructure Financing Companies) and UUS: |
Total Outstanding Productive Assets to Core Consumers / Total Outstanding Productive Assets The term core debtor/consumer refers to individual debtors/consumers or group debtors/consumers included in the category of the top 10 (ten) largest debtors at the Infrastructure Financing Company/Sharia Infrastructure Financing Company/UUS, excluding related parties.

b. Ratio of core debtor receivables to total equity

For Infrastructure Financing Companies: |
Total Outstanding Financing Receivables to Core Debtors / Total Outstanding Equity
For Sharia Infrastructure Financing Companies and UUS: |
Total Outstanding Productive Assets to Core Consumers / Total Outstanding Equity

Parameter or Indicator	Description
c. Ratio of receivables per economic sector

For Infrastructure Financing Companies: |
Total Outstanding Financing Receivables per Economic Sector / Total Outstanding Financing Receivables
For Sharia Infrastructure Financing Companies and UUS: |
Total Outstanding Productive Assets per Economic Sector / Total Outstanding Productive Assets Financing receivables/productive assets per economic sector refer to financing provided to financial and non-financial institutions per economic sector based on the applicable standard classification of Indonesian business fields.

d. Ratio of financing receivables per region

For Infrastructure Financing Companies: |
Total Outstanding Financing Receivables per Region / Total Outstanding Financing Receivables
For Sharia Infrastructure Financing Companies and UUS: |
Total Outstanding Productive Assets per Region / Total Outstanding Productive Assets

Parameter or Indicator	Description
Total Outstanding Productive Assets
Financing receivables/productive assets per region refer to financing provided to financial and non-financial institutions per region.

e. Ratio of receivables growth

For Infrastructure Financing Companies: |
(Total Outstanding Financing Receivables Current Year Period - Total Outstanding Financing Receivables Previous Year Period) / Total Outstanding Financing Receivables Previous Year Period
For Sharia Infrastructure Financing Companies and UUS: |
(Total Outstanding Productive Assets Current Year Period - Total Outstanding Productive Assets Previous Year Period) / Total Outstanding Productive Assets Previous Year Period The achievement of financing receivables/productive assets growth per year is the growth rate of receivables in the current year (yoy).

f. Ratio of disbursement per financing object

For Infrastructure Financing Companies: |
Disbursement per Infrastructure Financing Object / Total Outstanding Financing Receivables
For Sharia Infrastructure Financing Companies and UUS: |
Disbursement per Infrastructure Financing Object / Total Outstanding Productive Assets Infrastructure Financing Objects as referred to in Article 4 paragraph (1) of Financial Services Authority Regulation Number 46/POJK.05/2020 concerning Infrastructure Financing Companies.

Quality of financing receivables and adequacy of reserves
a. Ratio of non-performing financing receivables (gross)

For Infrastructure Financing Companies: |
Total Outstanding Non-Performing Financing Receivables / Total Outstanding Financing Receivables
For Sharia Infrastructure Financing Companies and UUS: |
Total Outstanding Non-Performing Financing Assets / Total Outstanding Productive Assets Non-performing financing receivables/productive assets refer to all assets owned by Infrastructure Financing Companies/Sharia Infrastructure Financing Companies/UUS intended to generate income in the form of financing that have quality classified as substandard, doubtful, and loss in accordance with the provisions of Financial Services Authority Regulation Number 46/POJK.05/2020 concerning Infrastructure Financing Companies.

b. Ratio of non-performing financing receivables (neto)

For Infrastructure Financing Companies: |
(Total Outstanding Non-Performing Financing Receivables - Provisions for Financing Receivables Write-off for Non-Performing Financing Receivables) / Total Outstanding Financing Receivables
For Sharia Infrastructure Financing Companies and UUS: |
(Total Outstanding Non-Performing Productive Assets - Provisions for Productive Assets Write-off for Non-Performing Productive Assets) / Total Outstanding Productive Assets Non-performing financing receivables/productive assets refer to all assets owned by Infrastructure Financing Companies/Sharia Infrastructure Financing Companies/UUS intended to generate income in the form of financing that have quality classified as substandard, doubtful, and loss in accordance with the provisions of Financial Services Authority Regulation Number 46/POJK.05/2020 concerning Infrastructure Financing Companies.

c. Ratio of low-quality financing receivables

For Infrastructure Financing Companies: |
Total Outstanding Low-Quality Financing Receivables / Total Outstanding Financing Receivables
For Sharia Infrastructure Financing Companies and UUS: |
Total Outstanding Low-Quality Productive Assets / Total Outstanding Productive Assets Low-quality financing receivables/productive assets refer to all assets owned by Infrastructure Financing Companies/Sharia Infrastructure Financing Companies/UUS intended to generate income in the form of financing that have quality classified as special mention, substandard, doubtful, and loss in accordance with the provisions of Financial Services Authority Regulation Number 46/POJK.05/2020 concerning Infrastructure Financing Companies.

d. Ratio of low-quality financing receivables neto

For Infrastructure Financing Companies: |
(Total Outstanding Low-Quality Financing Receivables - Provisions for Financing Receivables Write-off for Low-Quality Financing) / Total Outstanding Financing Receivables
For Sharia Infrastructure Financing Companies and UUS: |
(Total Outstanding Low-Quality Productive Assets - Provisions for Productive Assets Write-off for Low-Quality Financing) / Total Outstanding Productive Assets Low-quality financing receivables/productive assets refer to all assets owned by Infrastructure Financing Companies/Sharia Infrastructure Financing Companies/UUS intended to generate income in the form of financing that have quality classified as special mention, substandard, doubtful, and loss in accordance with the provisions of Financial Services Authority Regulation Number 46/POJK.05/2020 concerning Infrastructure Financing Companies.

e. Ratio of restructured financing

For Infrastructure Financing Companies: |
Total Outstanding Restructured Financing Receivables / Total Outstanding Financing Receivables
For Sharia Infrastructure Financing Companies and UUS: |
Total Outstanding Restructured Productive Assets / Total Outstanding Productive Assets Restructured financing receivables/productive assets refer to all assets owned by Infrastructure Financing Companies/Sharia Infrastructure Financing Companies/UUS intended to generate income in the form of Financing that have been restructured.

f. Ratio of restructured financing with performing and special mention quality against total financing receivables

For Infrastructure Financing Companies: |
Total Outstanding Restructured Financing Receivables with Performing and Special Mention Quality / Total Outstanding Financing Receivables
For Sharia Infrastructure Financing Companies and UUS: |
Total Outstanding Restructured Productive Assets with Performing and Special Mention Quality / Total Outstanding Productive Assets Calculated over the period from January 1 to December 31 of the current year.

g. Ratio of restructured financing with performing and special mention quality against total restructured financing receivables

For Infrastructure Financing Companies: |
Total Outstanding Restructured Financing Receivables with Performing and Special Mention Quality / Total Outstanding Restructured Financing Receivables
For Sharia Infrastructure Financing Companies and UUS: |
Total Outstanding Restructured Productive Assets with Performing and Special Mention Quality / Total Outstanding Restructured Productive Assets Calculated over the period from January 1 to December 31 of the current year.

h. Ratio of non-performing financing receivables per economic sector against total financing receivables per economic sector

For Infrastructure Financing Companies: |
Total Outstanding Non-Performing Financing Receivables per Economic Sector / Total Outstanding Financing Receivables per Economic Sector
For Sharia Infrastructure Financing Companies and UUS: |
Total Outstanding Non-Performing Productive Assets per Economic Sector / Total Outstanding Productive Assets per Economic Sector Low-quality financing receivables/productive assets refer to all assets owned by Infrastructure Financing Companies/Sharia Infrastructure Financing Companies/UUS intended to generate income in the form of financing that have quality classified as special mention, substandard, doubtful, and loss in accordance with the provisions of Financial Services Authority Regulation Number 46/POJK.05/2020 concerning Infrastructure Financing Companies.

i. Ratio of non-performing financing receivables per economic sector against total non-performing financing receivables

For Infrastructure Financing Companies: |
Total Outstanding Non-Performing Financing Receivables per Economic Sector / Total Outstanding Non-Performing Financing Receivables
For Sharia Infrastructure Financing Companies and UUS: |
Total Outstanding Non-Performing Productive Assets per Economic Sector / Total Outstanding Non-Performing Productive Assets Low-quality financing receivables/productive assets refer to all assets owned by Infrastructure Financing Companies/Sharia Infrastructure Financing Companies/UUS intended to generate income in the form of financing that have quality classified as special mention, substandard, doubtful, and loss in accordance with the provisions of Financial Services Authority Regulation Number 46/POJK.05/2020 concerning Infrastructure Financing Companies.

j. Ratio of impairment loss provisions

For Infrastructure Financing Companies: |
Total Outstanding ECL / Total Outstanding Financing Receivables
For Sharia Infrastructure Financing Companies and UUS: |
Total Outstanding ECL / Total Outstanding Productive Assets k. Ratio of ECL for non-performing financing receivables
For Infrastructure Financing Companies: |
Total Outstanding ECL for Non-Performing Financing Receivables / Total Outstanding Financing Receivables
For Sharia Infrastructure Financing Companies and UUS: |
Total Outstanding ECL for Non-Performing Productive Assets / Total Outstanding Productive Assets

External Factors
Changes in economic conditions, technology, or regulations that affect interest rates, exchange rates, debtor business cycles, and other external factors, which impact the debtor's ability to repay loans. Quite clear.

Table II.C.2: Guidelines for Setting Inherent Risk Levels for Credit Risk

Ranking	Definition of Ranking
Ranking 1 (Low)
Considering the business activities conducted by Infrastructure Financing Companies, the potential losses faced by Infrastructure Financing Companies from credit risk are classified as very low during a certain period in the future. Examples of characteristics of Infrastructure Financing Companies included in Ranking 1 (low) include the following:
a. financing disbursement portfolio is dominated by very low credit risk exposures; b. financing disbursement exposure is very well diversified;
c. financing disbursement has very good quality;
d. financing disbursement strategy or Infrastructure Financing Company business model is classified as very stable; and e. financing disbursement portfolio is relatively unaffected by changes in external factors.

Ranking 2 (Low-Medium)
Considering the business activities conducted by Infrastructure Financing Companies, the potential losses faced by Infrastructure Financing Companies from credit risk are classified as low during a certain period in the future. Examples of characteristics of Infrastructure Financing Companies included in Ranking 2 (low-medium) include the following:
a. financing disbursement portfolio is dominated by low credit risk exposures; b. financing disbursement exposure is well diversified;
c. financing disbursement has good quality;
d. financing disbursement strategy or Infrastructure Financing Company business model is classified as relatively stable; and e. financing disbursement portfolio is less affected by changes in external factors.

Ranking 3 (Medium)
Considering the business activities conducted by Infrastructure Financing Companies, the potential losses faced by Infrastructure Financing Companies from credit risk are classified as moderately high during a certain period in the future. Examples of characteristics of Infrastructure Financing Companies included in Ranking 3 (medium) include the following:
a. financing disbursement portfolio is dominated by moderately high credit risk exposures; b. there is a moderately significant concentration of financing disbursement;
c. financing disbursement has poor quality;
d. financing disbursement strategy or Infrastructure Financing Company business model is generally classified as moderately stable; and e. financing disbursement portfolio is moderately affected by changes in external factors.

Ranking 4 (Medium-High)
Considering the business activities conducted by Infrastructure Financing Companies, the potential losses faced by Infrastructure Financing Companies from credit risk are classified as high during a certain period in the future. Examples of characteristics of Infrastructure Financing Companies included in Ranking 4 (medium-high) include the following:
a. financing disbursement portfolio is dominated by high credit risk exposures; b. there is a significant concentration of financing disbursement;
c. financing disbursement has bad quality;
d. there are significant changes in the financing disbursement strategy or Infrastructure Financing Company business model; and e. financing disbursement portfolio is affected by changes in external factors.

Ranking 5 (High)
Considering the business activities conducted by Infrastructure Financing Companies, the potential losses faced by Infrastructure Financing Companies from credit risk are classified as very high during a certain period in the future. Examples of characteristics of Infrastructure Financing Companies included in Ranking 5 (high) include the following:
a. financing disbursement portfolio is dominated by very high credit risk exposures; b. there is a very significant concentration of financing disbursement;
c. financing disbursement has very bad quality;
d. there are very significant changes in the financing disbursement strategy or Infrastructure Financing Company business model; and e. financing disbursement portfolio is very affected by changes in external factors.

Table II.C.3: Guidelines for Setting Risk Management Implementation Quality for Credit Risk

Ranking	Definition of Ranking
Ranking 1 (Strong)
The quality of risk management implementation for credit risk is very adequate, with minor weaknesses that are not significant and can be ignored.
Examples of characteristics of Infrastructure Financing Companies included in Ranking 1 (strong) include the following:
a. formulation of risk levels to be taken (risk appetite) and risk tolerance is very adequate and aligned with overall strategic objectives and business strategy; b. Board of Directors, Board of Commissioners, and/or DPS have very good awareness and understanding regarding credit risk management, credit risk sources, and credit risk levels at the Infrastructure Financing Company;
c. credit risk management culture is very strong and has been very well internalized at all organizational levels;
d. execution of duties by the Board of Directors, Board of Commissioners, and/or DPS overall is very adequate; e. credit risk management function is independent, has clear duties and responsibilities, and operates very well; f. delegation of authority is controlled and monitored periodically, and operates very well; g. financing strategy is very good and aligned with the risk levels to be taken (risk appetite) and credit risk tolerance (risk tolerance); h. policies, procedures, and limit setting for credit risk are very adequate and available for all credit risk management areas, aligned with implementation, and well understood by employees;
i. credit risk management process is very adequate in identifying, measuring, monitoring, and controlling credit risk;
j. financing disbursement process is generally very adequate from the financing analysis process to non-performing asset handling; k. credit risk grading system and implementation are very good;
l. there is an independent financing review function that operates well;
m. management information system for credit risk is very good, producing credit risk reports for the Board of Directors, Board of Commissioners, and/or DPS; n. human resources are very adequate in terms of quantity and quality in the credit risk management function; o. internal control system is very effective in supporting the implementation of credit risk management; p. independent review execution by the internal audit unit and functions performing independent review is very adequate in terms of methodology, frequency, and reporting to the Board of Directors, Board of Commissioners, and/or DPS; q. generally, there are no significant weaknesses based on independent review results; and r. follow-up on independent reviews has been implemented very adequately.

Ranking 2 (Fairly Strong)
The quality of risk management implementation for credit risk is adequate despite some minor weaknesses that can be resolved in normal business activities.
Examples of characteristics of Infrastructure Financing Companies included in Ranking 2 (fairly strong) include the following:
a. formulation of risk levels to be taken (risk appetite) and risk tolerance is adequate and aligned with overall strategic objectives and business strategy; b. Board of Directors, Board of Commissioners, and/or DPS have good awareness and understanding regarding credit risk management, credit risk sources, and credit risk levels at the Infrastructure Financing Company;
c. credit risk management culture is strong and has been well internalized at all organizational levels;
d. execution of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally adequate, with some weaknesses but not significant and can be repaired immediately; e. credit risk management function has clear duties and responsibilities and operates well, but there are minor weaknesses that can be resolved in normal business activities; f. delegation of authority is controlled and monitored periodically; g. financing strategy is good and aligned with the risk levels to be taken (risk appetite) and credit risk tolerance (risk tolerance); h. policies, procedures, and limit setting for credit risk are adequate and available for all credit risk management areas, aligned with implementation, and well understood by employees despite minor weaknesses;
i. credit risk management process is adequate in identifying, measuring, monitoring, and controlling credit risk;
j. financing disbursement process is good, with minor weaknesses in one or more aspects of fund provision that can be easily repaired; k. credit risk grading system and implementation are good;
l. there is an independent financing review function, but there are minor weaknesses although they do not disrupt the overall process;
m. management information system for credit risk is good, including credit risk reporting to the Board of Directors, Board of Commissioners, and/or DPS, but there are minor weaknesses that can be easily repaired; n. human resources are adequate in terms of quantity and quality in the credit risk management function; o. internal control system is effective in supporting the implementation of credit risk management; p. independent review execution by the internal audit unit and functions performing independent review is adequate in terms of methodology, frequency, and reporting to the Board of Directors, Board of Commissioners, and/or DPS; q. there are weaknesses but not significant based on independent review results; and r. follow-up on independent reviews has been implemented adequately.

Rating Definition

Rank 3
(Adequate)
The quality of credit risk management implementation is adequately sufficient. Although minimum requirements are met, there are some weaknesses that require management attention.

Examples of characteristics of Infrastructure Financing Companies included in rank 3 (adequate) are as follows:
a. formulation of the level of risk to be taken (risk appetite) and risk tolerance is adequately sufficient but not always aligned with overall strategic objectives and business strategy; b. the Board of Directors, Board of Commissioners, and/or DPS have adequate awareness and understanding regarding credit risk management, credit risk sources, and the level of credit risk in the Infrastructure Financing Company;
c. credit risk management culture is adequately strong and has been internalized adequately but is not always implemented consistently;
d. the execution of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally adequately sufficient, but there are weaknesses in some assessment aspects that need management attention; e. the credit risk management function is adequate, but there are some weaknesses including reporting to the Board of Directors, Board of Commissioners, and/or DPS that require management attention; f. delegation of authority is adequate, but control and monitoring are not always implemented well; g. financing strategy is sufficiently aligned with the level of risk to be taken (risk appetite) and credit risk tolerance (risk tolerance); h. policies, procedures, and limit setting for credit risk are adequately sufficient but not always consistent with implementation;
i. the credit risk management process is adequately sufficient in identifying, measuring, monitoring, and controlling credit risk;
j. the financing disbursement process is adequate, with weaknesses in one or more aspects of fund provision that need management attention; k. the credit risk grading system is adequate;
l. the financing review function is adequate, but there are some weaknesses that need management attention;
m. the management information system for credit risk meets minimum expectations but there are some weaknesses including reporting to the Board of Directors, Board of Commissioners, and/or DPS that require management attention; n. human resources are adequately sufficient both in quantity and quality in the credit risk management function; o. the internal control system is adequately effective in supporting the implementation of credit risk management; p. the implementation of independent review by the internal audit unit and functions performing independent review is adequately sufficient, but there are some weaknesses in methodology, frequency, and/or reporting to the Board of Directors, Board of Commissioners, and/or DPS that require management attention; q. there are weaknesses that are quite significant based on the results of independent review that require management attention; and r. follow-up on independent review has been implemented adequately.

Rank 4
(Somewhat Weak)
The quality of credit risk management implementation is less than adequate, with significant weaknesses in various aspects of credit risk management that require immediate corrective action.

Examples of characteristics of Infrastructure Financing Companies included in rank 4 (somewhat weak) are as follows:
a. formulation of the level of risk to be taken (risk appetite) and risk tolerance (risk tolerance) is less than adequate and not aligned with overall strategic objectives and business strategy; b. there are significant weaknesses in the awareness and understanding of the Board of Directors, Board of Commissioners, and/or DPS regarding credit risk management, credit risk sources, and the level of credit risk in the Infrastructure Financing Company;
c. credit risk management culture is less strong and has not been internalized well at every organizational level;
d. the execution of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally less than adequate, with weaknesses in various assessment aspects that require immediate improvement; e. there are significant weaknesses in the credit risk management function that require immediate improvement; f. delegation of authority is weak, not controlled and not monitored well; g. financing strategy is less aligned with the level of risk to be taken (risk appetite) and credit risk tolerance (risk tolerance); h. there are significant weaknesses in policies, procedures, and limit setting for credit risk;
i. the credit risk management process is less adequate in identifying, measuring, monitoring, and controlling credit risk;
j. the financing disbursement process is less good and there are weaknesses in one or more aspects of fund provision that need to be improved immediately; k. the credit risk grading system and application are less good;
l. financing review is less good and there are some weaknesses that need to be improved immediately;
m. there are significant weaknesses in the management information system for credit risk including reporting to the Board of Directors, Board of Commissioners, and/or DPS that require immediate improvement; n. human resources are less adequate in terms of quantity and quality in the credit risk management function; o. the internal control system is less effective in supporting the implementation of credit risk management; p. the implementation of independent review by the internal audit unit and functions performing independent review is less adequate, with weaknesses in methodology, frequency, and/or reporting to the Board of Directors, Board of Commissioners, and/or DPS that require immediate improvement; q. there are significant weaknesses based on the results of independent review that require immediate corrective action; and r. follow-up on independent review is less adequate.

Rank 5
(Weak)
The quality of credit risk management implementation is inadequate, with significant weaknesses in various aspects of credit risk management whose resolution is beyond management's capability.

Examples of characteristics of Infrastructure Financing Companies included in rank 5 (weak) are as follows:
a. formulation of the level of risk to be taken (risk appetite) and risk tolerance (risk tolerance) is inadequate and there is no connection with overall strategic objectives and business strategy; b. the awareness and understanding of the Board of Directors, Board of Commissioners, and/or DPS regarding credit risk management, credit risk sources, and the level of credit risk in the Infrastructure Financing Company is very weak;
c. credit risk management culture is not strong or does not exist at all;
d. the execution of duties by the Board of Directors, Board of Commissioners, and/or DPS is inadequate, with significant weaknesses in almost all assessment aspects and the resolution is beyond the capability of the Infrastructure Financing Company; e. there are significant weaknesses in the credit risk management function that require fundamental improvement; f. delegation of authority is very weak or non-existent; g. financing strategy is less aligned with the level of risk to be taken and credit risk tolerance; h. there are very significant weaknesses in policies, procedures, and limit setting for credit risk;
i. the credit risk management process is inadequate in identifying, measuring, monitoring, and controlling credit risk;
j. the fund disbursement process is less good, with weaknesses in one or more aspects of fund provision that need to be improved immediately; k. the credit risk grading system and application are not good;
l. the financing review function is not good, with some weaknesses that need to be improved immediately;
m. there are fundamental weaknesses in the management information system for credit risk including risk reporting to the Board of Directors, Board of Commissioners, and/or DPS that need to be improved immediately; n. human resources are inadequate in terms of quantity and quality in the credit risk management function; o. the internal control system is ineffective in supporting the implementation of credit risk management; p. the implementation of independent review by the internal audit unit and functions performing independent review is less or inadequate, with weaknesses in methodology, frequency, and/or reporting to the Board of Directors, Board of Commissioners, and/or DPS that require fundamental improvement; q. there are very significant weaknesses based on the results of independent review whose corrective action r. follow-up on independent review is inadequate.

Table II.D.1: Parameters or Indicators of Inherent Risk Assessment for Market Risk

Parameter or Indicator	Description
1. Business strategy and policies related to market risk	Business strategies and policies related to financing disbursement and funding acquisition sensitive to market risk, including interest rates and foreign exchange.<br><br>Business strategies and policies include among others:<br>a. the use of interest rate, yield, and foreign exchange risk considerations in setting funding acquisition strategies; and<br>b. the use of interest rate and yield risk considerations in setting financing disbursement strategies, including setting financing interest rates or yields.
2. Volume and composition of asset portfolio exposed to market risk	a. Ratio of receivables with floating interest rates<br>1) For Infrastructure Financing Companies:<br>Total Outstanding Receivables with Floating Interest Rates (Floating) / Total Outstanding Receivables<br>2) For Sharia Infrastructure Financing Companies and UUS:<br>This ratio is not used for Sharia Infrastructure Financing Companies and UUS.<br><br>b. Ratio of placement in financial instruments with floating interest rates (floating)<br>1) For Infrastructure Financing Companies:<br>Total Outstanding Financial Instruments with Floating Interest Rates (Floating) / Total Outstanding Financial Instruments<br>2) For Sharia Infrastructure Financing Companies and UUS:<br>This ratio is not used for Sharia Infrastructure Financing Companies and UUS.<br><br>Financial instruments are means of fund placement permitted based on Article 28 of Financial Services Authority Regulation Number 46/POJK.05/2020 concerning Infrastructure Financing Companies.<br><br>c. Ratio of trading assets, derivatives, and Fair Value Option (FVO) to total assets<br>1) Trading Assets are securities, securities sold with a promise to buy back (REPO), acceptance receivables, and other assets with a trading measurement category.<br>2) Derivative Assets are all spot and derivative transaction assets.<br>3) Fair Value Option (FVO) Assets are securities, securities sold with a promise to buy back (REPO), acceptance receivables, and other assets with a measurement category measured at fair value.<br><br>d. Potential Gain or Loss from Trading Assets, Derivatives, and FVO against non-operating income<br>1) Potential Gain or Loss from Trading Assets, Derivatives, and FVO is the total net gain or loss from:<br>a. Increase or decrease in fair value (mark to market/MTM) of securities;<br>b. Increase or decrease in fair value (MTM) of other financial assets;<br>c. Financial liabilities increase or decrease in fair value (MTM); and<br>d. Change in fair value (MTM) on forwards, futures, swaps, options, spots, and others.<br>2) Non-Operating Income is all income obtained by the Infrastructure Financing Company/Sharia Infrastructure Financing Company/UUS from non-operating activities.
3. Volume and composition of liability portfolio exposed to market risk	a. Ratio of loans with floating interest rates (floating)<br>1) For Infrastructure Financing Companies:<br>Total Loans with Floating Interest Rates (Floating) / Total Loans<br>2) For Sharia Infrastructure Financing Companies and UUS:<br>This ratio is not used for Sharia Infrastructure Financing Companies and UUS.<br><br>b. Ratio of loans in foreign currency<br>Total Outstanding Loans in Foreign Currency / Total Outstanding Loans<br><br>c. Ratio of issued securities with floating interest rates (floating)<br>1) For Infrastructure Financing Companies:<br>Total Outstanding Issued Securities with Floating Interest Rates (Floating) / Total Outstanding Issued Securities<br>2) For Sharia Infrastructure Financing Companies and UUS:<br>This ratio is not used for Sharia Infrastructure Financing Companies and UUS.<br><br>d. Ratio of issued securities for financing in foreign currency<br>Total Outstanding Issued Securities in Foreign Currency / Total Outstanding Issued Securities<br><br>e. Ratio of liabilities in foreign currency that have been hedged<br>Total Outstanding Liabilities in Foreign Currency that have been Hedged (Hedge) / Total Outstanding Liabilities in Foreign Currency

Rank 1
(Low)
Considering the business activities conducted by the Infrastructure Financing Company, the possibility of losses faced by the Infrastructure Financing Company from market risk is classified as very low during a certain period in the future.

Examples of characteristics of Infrastructure Financing Companies included in rank 1 (low) are as follows:
a. business strategies and policies related to market risk are classified as conservative or very low risk; b. market risk exposure on assets and liabilities is not significant;
c. hedging position is very effective (completely matched/hedged); and
d. asset and liability structure is not sensitive to interest rate changes.

Rank 2
(Medium Low)
Considering the business activities conducted by the Infrastructure Financing Company, the possibility of losses faced by the Infrastructure Financing Company from market risk is classified as low during a certain period in the future.

Examples of characteristics of Infrastructure Financing Companies included in rank 2 (medium low) are as follows:
a. business strategies and policies related to market risk are classified as low risk; b. market risk exposure on assets and liabilities is less significant;
c. hedging position is effective; and
d. asset and liability structure is less sensitive to interest rate changes.

Rank 3
(Medium)
Considering the business activities conducted by the Infrastructure Financing Company, the possibility of losses faced by the Infrastructure Financing Company from market risk is classified as quite high during a certain period in the future.

Examples of characteristics of Infrastructure Financing Companies included in rank 3 (medium) are as follows:
a. business strategies and policies related to market risk are classified as quite high risk; b. market risk exposure on assets and liabilities is quite significant;
c. hedging position is quite effective; and
d. asset and liability structure is quite sensitive to interest rate changes.

Table II.D.2: Guidelines for Setting Inherent Risk Level for Market Risk

Rank 4
(Medium High)
Considering the business activities conducted by the Infrastructure Financing Company, the possibility of losses faced by the Infrastructure Financing Company from market risk is high during a certain period in the future.

Examples of characteristics of Infrastructure Financing Companies included in rank 4 (medium high) are as follows:
a. business strategies and policies related to market risk are classified as high risk; b. market risk exposure on assets and liabilities is significant;
c. hedging position is less effective; and
d. asset and liability structure is sensitive to interest rate changes.

Rank 5
(High)
Considering the business activities conducted by the Infrastructure Financing Company, the possibility of losses faced by the Infrastructure Financing Company from market risk is very high during a certain period in the future.

Examples of characteristics of Infrastructure Financing Companies included in rank 5 (high) are as follows:
a. business strategies and policies related to market risk are classified as very high risk; b. market risk exposure on assets and liabilities is very significant;
c. hedging position is ineffective; and
d. asset and liability structure is very sensitive to interest rate changes.

Table II.D.3: Guidelines for Setting the Quality of Credit Risk Management Implementation for Market Risk

Rank 1
(Strong)
The quality of market risk management implementation is very adequate, with minor weaknesses that are not significant and can be ignored.

Examples of characteristics of Infrastructure Financing Companies included in rank 1 (strong) are as follows:
a. formulation of the level of risk to be taken (risk appetite) and risk tolerance (risk tolerance) is very adequate and has aligned with overall strategic objectives and business strategy; b. the Board of Directors, Board of Commissioners, and/or DPS have very good awareness and understanding regarding market risk management, market risk sources, and the level of market risk in the Infrastructure Financing Company;
c. market risk management culture is very strong and has been internalized very well at all organizational levels;
d. the execution of duties by the Board of Directors, Board of Commissioners, and/or DPS is overall very adequate; e. the market risk management function has run very well; f. delegation of authority is controlled and monitored periodically, and has run very well; g. management strategy for market risk is very adequate; h. policies, procedures, and limit setting for market risk are very adequate and available for all areas of market risk management, aligned with implementation, and well understood by employees;
i. the market risk management process is very adequate in identifying, measuring, monitoring, and controlling market risk;
j. the management information system for market risk is very good, resulting in market risk reports that [text cuts off here in source, likely referring to reporting to Board of Commissioners, and/or DPS]; k. human resources are very adequate in terms of quantity and quality in the market risk management function;
l. the internal control system is very effective in supporting the implementation of market risk management;
m. the implementation of independent review by the internal audit unit and functions performing independent review is very adequate in terms of methodology, frequency, and reporting to the Board of Directors, Board of Commissioners, and/or DPS; n. generally there are no significant weaknesses based on the results of independent review; and o. follow-up on independent review has been implemented very adequately.

Rank 2
(Somewhat Strong)
The quality of market risk management implementation is adequate although there are some minor weaknesses that can be resolved in normal business activities.

Examples of characteristics of Infrastructure Financing Companies included in rank 2 (somewhat strong) are as follows:
a. formulation of the level of risk to be taken (risk appetite) and risk tolerance (risk tolerance) is adequate and has aligned with overall strategic objectives and business strategy; b. the Board of Directors, Board of Commissioners, and/or DPS have good awareness and understanding regarding market risk management, market risk sources, and the level of market risk in the Infrastructure Financing Company;
c. market risk management culture is strong and has been internalized well at all organizational levels;
d. the execution of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally adequate, with some weaknesses but not significant and can be improved immediately; e. the market risk management function has run well; f. delegation of authority is controlled and monitored periodically [Text cuts off in source] g. management strategy for market risk is adequate; h. policies, procedures, and limit setting for market risk are adequate and available for all areas of market risk management, aligned with implementation, and well understood by employees although there are minor weaknesses;
i. the market risk management process is adequate in identifying, measuring, monitoring, and controlling market risk;
j. the management information system for market risk is good including strategic risk reporting to the Board of Directors, Board of Commissioners, and/or DPS, but there are minor weaknesses that can be easily improved; k. human resources are adequate both in quantity and quality in the market risk management function;
l. the internal control system is effective in supporting the implementation of market risk management;
m. the implementation of independent review by the internal audit unit and functions performing independent review is adequate in terms of methodology, frequency, and reporting to the Board of Directors, Board of Commissioners, and/or DPS; n. there are weaknesses but not significant based on the results of independent review; and o. follow-up on independent review has been implemented adequately.

Rank 3
(Adequate)
The quality of market risk management implementation is adequately sufficient. Although minimum requirements are met, there are some weaknesses that require management attention.

Rating Definition Rating

receive management attention; e. the risk management function for market risk has operated quite well; f. delegation of authority is quite good, but control and monitoring are not always implemented well; g. management strategy for market risk is quite adequate; h. policies, procedures, and limit setting for market risk are quite adequate but not always consistent with implementation;
i. risk management process for market risk is quite adequate in identifying, measuring, monitoring, and controlling market risk;
j. information management system for market risk meets minimum expectations but has some weaknesses including reporting to the Board of Directors, Board of Commissioners, and/or DPS that requires management attention; k. human resources are quite adequate in terms of quantity and quality in the risk management function for market risk;
l. internal control system is quite effective in supporting the implementation of risk management for market risk;
m. implementation of independent review by internal audit unit and function performing independent review is quite adequate, but there are some weaknesses in methodology, frequency, and/or reporting to the Board of Directors, Board of Commissioners, and/or DPS that require management attention; n. there are quite significant weaknesses based on the results of independent review that require management attention; and o. follow-up on independent review has been implemented quite adequately.

Rating 4
(Somewhat Weak)
The quality of risk management implementation for market risk is inadequate, with significant weaknesses in various aspects of market risk management requiring immediate corrective action. Examples of characteristics of Infrastructure Financing Companies included in Rating 4 (somewhat weak) include the following:
a. formulation of risk level to be taken (risk appetite) and risk tolerance is inadequate and not aligned with overall strategic objectives and business strategy;

Rating Definition Rating

overall; b. there are significant weaknesses in the awareness and understanding of the Board of Directors, Board of Commissioners, and/or DPS regarding risk management for market risk, sources of market risk, and market risk levels in Infrastructure Financing Companies;
c. risk management culture for market risk is weak and has not been well internalized at every level of the organization;
d. implementation of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally inadequate, with weaknesses in various aspects of assessment requiring immediate improvement; e. the risk management function for market risk has operated less well; f. delegation of authority is weak, not controlled and not monitored well; g. management strategy for market risk is inadequate; h. there are significant weaknesses in policies, procedures, and limit setting for market risk;
i. risk management process for market risk is inadequate in identifying, measuring, monitoring, and controlling market risk;
j. there are significant weaknesses in the market risk management information system including reporting to the Board of Directors, Board of Commissioners, and/or DPS that require immediate improvement; k. human resources are inadequate in terms of quantity and quality in the risk management function for market risk;
l. internal control system is less effective in supporting the implementation of risk management for market risk;
m. implementation of independent review by internal audit unit and function performing independent review is inadequate, with weaknesses in methodology, frequency, and/or reporting to the Board of Directors, Board of Commissioners, and/or DPS that require immediate improvement; n. there are significant weaknesses based on the results of independent review that require immediate corrective action; and o. follow-up on independent review is inadequate.

Rating Definition Rating

Rating 5
(Weak)
The quality of risk management implementation for market risk is inadequate, with significant weaknesses in various aspects of market risk management whose resolution is beyond management's capability. Examples of characteristics of Infrastructure Financing Companies included in Rating 5 (weak) include the following:
a. formulation of risk level to be taken (risk appetite) and risk tolerance is inadequate and there is no connection with overall strategic objectives and business strategy; b. awareness and understanding of the Board of Directors, Board of Commissioners, and/or DPS regarding risk management for market risk, sources of market risk, and market risk levels in Infrastructure Financing Companies is very weak;
c. risk management culture for market risk is not strong or does not exist at all;
d. implementation of duties by the Board of Directors, Board of Commissioners, and/or DPS is inadequate, with significant weaknesses in almost all aspects of assessment and resolution beyond the capability of the Infrastructure Financing Company; e. the risk management function for market risk has operated poorly; f. delegation of authority is very weak or non-existent; g. management strategy for market risk is inadequate; h. there are very significant weaknesses in policies, procedures, and limit setting for market risk;
i. risk management process for market risk is inadequate in identifying, measuring, monitoring, and controlling market risk;
j. there are fundamental weaknesses in the market risk management information system; k. human resources are inadequate in terms of quantity and quality in the risk management function for market risk;
l. internal control system is ineffective in supporting the implementation of risk management for market risk;
m. implementation of independent review by internal audit unit and function performing independent review

Rating Definition Rating

is less than or inadequate, with weaknesses in methodology, frequency, and/or reporting to the Board of Directors, Board of Commissioners, and/or DPS that require fundamental improvement; n. there are very significant weaknesses based on the results of independent review whose corrective actions o. follow-up on independent review is inadequate.

Table II.E.1: Parameters or Indicators for Assessing Inherent Risk for Liquidity Risk
Parameter or Indicator Description

Composition of short-term assets and liabilities including administrative account transactions
a. Cash ratio (Cash + Cash Equivalents) / Current Liabilities b. Current ratio (Value of Current Assets) / (Value of Current Liabilities)
c. Significance of administrative account transactions (Total Administrative Account Transactions) / (Total Liabilities)
Cash flow management (Operating Cash Flow) / (Cash Inflows from Operating Activities) / (Cash Outflows from Operating Activities)
Vulnerability to funding needs
Vulnerability of Infrastructure Financing Company to funding needs and the ability of the Infrastructure Financing Company to meet funding needs.
Assessment indicators for the funding needs of Infrastructure Financing Companies in normal and crisis situations and the ability of the Infrastructure Financing Company to meet funding needs, including through analysis of:
a. asset-liability matching analysis; b. cash flow projections; and
c. stress tests.
Access to funding sources
a. Ability of the Infrastructure Financing Company to obtain funding sources in normal and crisis conditions.
Assessment focuses on the reputation of the Infrastructure Financing Company to maintain funding sources, credit line conditions, performance of access to funding sources, and support from the parent company (owner) or intra-group.

Parameter or Indicator Description

b. Gearing ratio

For Infrastructure Financing Companies:
(Bank Loans + Bond Issuance + Subordinated Loans + Medium Term Notes Issuance) / (Equity + Subordinated Loans - Investments)
For Islamic Infrastructure Financing Companies and UUS:
(Funding from Banks + Sukuk Issued via Public Offering + Subordinated Funding + Sukuk Issued without Public Offering) / (Equity + Subordinated Funding - Investments)

Table II.E.2: Guidelines for Setting Inherent Risk Level for Liquidity Risk
Rating Definition Rating

Rating 1
(Low)
Considering the business activities conducted by the Infrastructure Financing Company, the potential losses faced by the Infrastructure Financing Company from liquidity risk are classified as very low during a certain period in the future. Examples of characteristics of Infrastructure Financing Companies included in Rating 1 (low) include the following:
a. Infrastructure Financing Company has very adequate high-quality liquid assets to cover maturing liabilities; b. fulfillment of funding sources for the Infrastructure Financing Company is very stable;
c. volume of administrative account transactions is not significant;
d. intra-group funding commitments are not significant; e. Infrastructure Financing Company is very capable of meeting obligations and cash flow needs in normal conditions and crisis scenarios; f. cash flow mismatch from operating activities is very low; and g. access to funding sources is very adequate, proven by the very good reputation of the Infrastructure Financing Company, very adequate stand-by loans, and the existence of liquidity commitments or support from the parent company (owner) or intra-group.

Rating 2
(Medium Low)
Considering the business activities conducted by the Infrastructure Financing Company, the potential losses faced by the Infrastructure Financing Company from liquidity risk are classified as low during a certain period in the future. Examples of characteristics of Infrastructure Financing Companies included in Rating 2 (medium low) include the following:
a. Infrastructure Financing Company has adequate high-quality liquid assets to cover maturing liabilities; b. fulfillment of funding sources for the Infrastructure Financing Company is stable;
c. volume of administrative account transactions is less significant;
d. intra-group funding commitments are less significant; e. Infrastructure Financing Company is capable of meeting

Rating Definition Rating

obligations and cash flow needs in normal conditions and crisis scenarios; f. cash flow mismatch from operating activities is low; and g. access to funding sources is adequate, proven by the good reputation of the Infrastructure Financing Company, adequate stand-by loans, and the existence of liquidity commitments or support from the parent company (owner) or intra-group.

Rating 3
(Medium)
Considering the business activities conducted by the Infrastructure Financing Company, the potential losses faced by the Infrastructure Financing Company from liquidity risk are classified as quite high during a certain period in the future. Examples of characteristics of Infrastructure Financing Companies included in Rating 3 (medium) include the following:
a. Infrastructure Financing Company has quite adequate high-quality liquid assets to cover maturing liabilities; b. fulfillment of funding sources for the Infrastructure Financing Company is quite stable;
c. volume of administrative account transactions is quite significant;
d. intra-group funding commitments are quite significant; e. Infrastructure Financing Company is quite capable of meeting obligations and cash flow needs in normal conditions and crisis scenarios; f. cash flow mismatch from operating activities is quite high; and g. access to funding sources is quite adequate, proven by the quite good reputation of the Infrastructure Financing Company, quite adequate stand-by loans, and the existence of liquidity commitments or support from the parent company (owner) or intra-group.

Rating 4
(Medium High)
Considering the business activities conducted by the Infrastructure Financing Company, the potential losses faced by the Infrastructure Financing Company from liquidity risk are classified as high during a certain period in the future. Examples of characteristics of Infrastructure Financing Companies included in Rating 4 (medium high) include the following:
a. Infrastructure Financing Company has less adequate high-quality liquid assets to cover

Rating Definition Rating

maturing liabilities; b. fulfillment of funding sources for the Infrastructure Financing Company is less stable;
c. administrative account transactions are significant;
d. intra-group funding commitments are significant; e. Infrastructure Financing Company is less capable of meeting obligations and cash flow needs in normal conditions and crisis scenarios; f. cash flow mismatch from operating activities is high; and g. access to funding sources is less adequate due to the less good reputation of the Infrastructure Financing Company, limited stand-by loans, and the absence of liquidity commitments or support from the parent company (owner) or intra-group.

Rating 5
(High)
Considering the business activities conducted by the Infrastructure Financing Company, the potential losses faced by the Infrastructure Financing Company from liquidity risk are classified as very high during a certain period in the future. Examples of characteristics of companies included in Rating 5 (high) include the following:
a. Infrastructure Financing Company does not have high-quality liquid assets to meet maturing liabilities; b. fulfillment of funding sources for the Infrastructure Financing Company is unstable;
c. administrative account transactions are very significant;
d. intra-group funding commitments are very significant; h. Infrastructure Financing Company is unable to meet obligations and cash flow needs in normal conditions and crisis scenarios; e. cash flow mismatch from operating activities is very high; and f. access to funding sources is inadequate due to the deteriorating reputation of the Infrastructure Financing Company, unavailability of stand-by loans, and the absence of liquidity commitments or support from the parent company (owner) or intra-group.

Table II.E.3: Guidelines for Setting the Quality of Risk Management Implementation for Liquidity Risk
Rating Definition Rating

Rating 1
(Strong)
The quality of risk management implementation for liquidity risk is very adequate, with minor weaknesses that are not significant and can be ignored.
Examples of characteristics of Infrastructure Financing Companies included in Rating 1 (strong) include the following:
a. formulation of risk level to be taken (risk appetite) and risk tolerance is very adequate and aligned with overall strategic objectives and business strategy; b. Board of Directors, Board of Commissioners, and/or DPS have very good awareness and understanding regarding risk management for liquidity risk, sources of liquidity risk, and liquidity risk levels in Infrastructure Financing Companies;
c. risk management culture for liquidity risk is very strong and has been very well internalized at all levels of the organization;
d. implementation of duties by the Board of Directors, Board of Commissioners, and/or DPS is overall very adequate; e. the risk management function for liquidity risk is independent, has clear duties and responsibilities, and has operated very well; f. delegation of authority is controlled and monitored periodically, and has operated very well; g. liquidity management strategy is very adequate, including funding strategy, position and liquidity risk management strategy, intra-group position and liquidity risk management, management of high-quality liquid assets as collateral, and Contingency Funding Plan (CFP); h. policies, procedures, and limit setting for liquidity risk are very adequate and available for all areas of risk management for liquidity risk, aligned with implementation, and well understood by employees;
i. risk management process for liquidity risk is very adequate in identifying, measuring, monitoring, and controlling liquidity risk;
j. information management system for liquidity risk is very

Rating Definition Rating

good so that it generates liquidity risk reports that [Board of Commissioners, and/or DPS]; k. human resources are very adequate in terms of quantity and quality in the risk management function for liquidity risk;
l. internal control system is very effective in supporting the implementation of risk management for liquidity risk;
m. implementation of independent review by internal audit unit and function performing independent review is very adequate in terms of methodology, frequency, and reporting to the Board of Directors, Board of Commissioners, and/or DPS; n. generally, there are no significant weaknesses based on the results of independent review; and o. follow-up on independent review has been implemented very adequately.

Rating 2
(Somewhat Strong)
The quality of risk management implementation for liquidity risk is adequate although there are some minor weaknesses that can be resolved in normal business activities.
Examples of characteristics of Infrastructure Financing Companies included in Rating 2 (somewhat strong) include the following:
a. formulation of risk level to be taken (risk appetite) and risk tolerance is adequate and aligned with overall strategic objectives and business strategy; b. Board of Directors, Board of Commissioners, and/or DPS have good awareness and understanding regarding risk management for liquidity risk, sources of liquidity risk, and liquidity risk levels in Infrastructure Financing Companies;
c. risk management culture for liquidity risk is strong and has been well internalized at all levels of the organization;
d. implementation of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally adequate, with some weaknesses but not significant and can be improved immediately; e. the risk management function for liquidity risk has clear duties and responsibilities and has operated well, but there are minor weaknesses that can be resolved in normal business activities;

Rating Definition Rating

f. delegation of authority is controlled and monitored periodically

g. liquidity management strategy is adequate, including funding strategy, position and liquidity risk management strategy, intra-group position and liquidity risk management, management of high-quality liquid assets as collateral, and Contingency Funding Plan (CFP); h. policies, procedures, and limit setting for liquidity risk are adequate and available for all areas of risk management for liquidity risk, aligned with implementation, and well understood by employees although there are minor weaknesses;
i. risk management process for liquidity risk is adequate in identifying, measuring, monitoring, and controlling liquidity risk;
j. information management system for liquidity risk is good including reporting of strategic risks to the Board of Directors, Board of Commissioners, and/or DPS, but there are minor weaknesses that can be easily improved; k. human resources are adequate in terms of quantity and quality in the risk management function for liquidity risk;
l. internal control system is effective in supporting the implementation of risk management for liquidity risk;
m. implementation of independent review by internal audit unit and function performing independent review is adequate in terms of methodology, frequency, and reporting to the Board of Directors, Board of Commissioners, and/or DPS; n. there are weaknesses but not significant based on the results of independent review; and o. follow-up on independent review has been implemented adequately.

Rating 3
(Adequate)
The quality of risk management implementation for liquidity risk is quite adequate. Although minimum requirements are met, there are some weaknesses that require management attention. Examples of characteristics of Infrastructure Financing Companies included in Rating 3 (adequate) include the following:
a. formulation of risk level to be taken (risk appetite) and risk tolerance is quite adequate but not always aligned with strategic

Rating Definition Rating

objectives and overall business strategy; b. Board of Directors, Board of Commissioners, and/or DPS have quite good awareness and understanding regarding risk management for liquidity risk, sources of liquidity risk, and liquidity risk levels in Infrastructure Financing Companies;
c. risk management culture for liquidity risk is quite strong and has been quite well internalized but not always implemented consistently;
d. implementation of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally quite adequate, but there are weaknesses in some aspects of assessment that need management attention; e. the risk management function for liquidity risk is quite good, but there are some weaknesses including reporting to the Board of Directors, Board of Commissioners, and/or DPS that require management attention; f. delegation of authority is quite good, but control and monitoring are not always implemented well; g. liquidity management strategy is quite adequate, with some weaknesses in one or more aspects of liquidity management that need management attention; h. policies, procedures, and limit setting for liquidity risk are quite adequate but not always consistent with implementation;
i. risk management process for liquidity risk is quite adequate in identifying, measuring, monitoring, and controlling liquidity risk;
j. information management system for liquidity risk meets minimum expectations but has some weaknesses including reporting to the Board of Directors, Board of Commissioners, and/or DPS that require management attention; k. human resources are quite adequate in terms of quantity and quality in the risk management function for liquidity risk;
l. internal control system is quite effective in supporting the implementation of risk management for liquidity risk;
m. implementation of independent review by internal audit unit and function performing independent review is quite adequate, but there are some weaknesses in methodology, frequency, and/or reporting to the Board of Directors,

Rating Definition Rating

Board of Commissioners, and/or DPS

Rating Definition

n. there are weaknesses that are quite significant based on the results of an independent review that require management attention; and o. follow-up on the independent review has been carried out adequately.

Rating 4
(Somewhat Weak)
The quality of risk management implementation for liquidity risk is less than adequate, there are significant weaknesses in various aspects of risk management for liquidity risk that require immediate corrective action. Examples of characteristics of Infrastructure Financing Companies that fall into rating 4 (somewhat weak) include the following:
a. the formulation of the level of risk to be taken (risk appetite) and risk tolerance is less than adequate and not aligned with overall strategic objectives and business strategy; b. there are significant weaknesses in the awareness and understanding of the Board of Directors, Board of Commissioners, and/or DPS regarding risk management for liquidity risk, sources of liquidity risk, and the level of liquidity risk in the Infrastructure Financing Company;
c. the risk management culture for liquidity risk is not strong and has not been well internalized at every level of the organization;
d. the implementation of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally less than adequate, there are weaknesses in various aspects of assessment that require immediate improvement; e. there are significant weaknesses in the risk management function for liquidity risk that require immediate improvement; f. delegation of authority is weak, not controlled and not monitored well; g. liquidity management strategy is less than adequate, there are weaknesses in aspects of liquidity management that require immediate improvement; h. there are significant weaknesses in policies, procedures, and the establishment of limits for liquidity risk;
i. the risk management process for liquidity risk is less than adequate in identifying, measuring, monitoring, and controlling liquidity risk;

Rating Definition

j. there are significant weaknesses in the management information system for liquidity risk including reporting to the Board of Directors, Board of Commissioners, and/or DPS that require immediate improvement; k. human resources are less than adequate in terms of quantity and quality in the risk management function for liquidity risk;
l. the internal control system is less effective in supporting the implementation of risk management for liquidity risk;
m. the implementation of independent reviews by the internal audit unit and functions conducting independent reviews is less than adequate, there are weaknesses in methodology, frequency, and/or reporting to the Board of Directors, Board of Commissioners, and/or DPS that require immediate improvement; n. there are significant weaknesses based on the results of independent reviews that require immediate corrective action; and o. follow-up on the independent review is less than adequate.

Rating 5
(Weak)
The quality of risk management implementation for liquidity risk is inadequate, there are significant weaknesses in various aspects of risk management for liquidity risk whose resolution is beyond the management's capability. Examples of characteristics of Infrastructure Financing Companies that fall into rating 5 (weak) include the following:
a. the formulation of the level of risk to be taken (risk appetite) and risk tolerance is inadequate and there is no connection with overall strategic objectives and business strategy; b. the awareness and understanding of the Board of Directors, Board of Commissioners, and/or DPS regarding risk management for liquidity risk, sources of liquidity risk, and the level of liquidity risk in the Infrastructure Financing Company is very weak;
c. the risk management culture for liquidity risk is not strong or does not exist at all;
d. the implementation of duties by the Board of Directors, Board of Commissioners, and/or DPS is inadequate, there are significant weaknesses in almost all aspects of assessment and the actions and resolution are beyond the capability of the Infrastructure Financing Company; e. there are significant weaknesses in the risk management function for liquidity risk that require fundamental improvement; f. delegation of authority is very weak or non-existent; g. liquidity management strategy is inadequate, there are weaknesses in almost all aspects of liquidity management that require immediate improvement; h. there are very significant weaknesses in policies, procedures, and the establishment of limits for liquidity risk;
i. the risk management process for liquidity risk is inadequate in identifying, measuring, monitoring, and controlling liquidity risk;
j. there are fundamental weaknesses in the management information system for liquidity risk; k. human resources are inadequate in terms of quantity and quality in the risk management function for liquidity risk;
l. the internal control system is ineffective in supporting the implementation of risk management for liquidity risk;
m. the implementation of independent reviews by the internal audit unit and functions conducting independent reviews is less than or inadequate, there are weaknesses in methodology, frequency, and/or reporting to the Board of Directors, Board of Commissioners, and/or DPS that require fundamental improvement; n. there are very significant weaknesses based on the results of independent reviews whose corrective actions o. follow-up on the independent review is inadequate.

Table II.F.1: Parameters or Indicators for Assessing Inherent Risk for Legal Risk
Parameter or Indicator Description

Absence and/or change in legislation
a. The proportion of Infrastructure Financing Company products that are not clearly regulated by statutory regulations and such products tend to have a high level of complexity, compared to the equity owned by the Infrastructure Financing Company Nominal Value of Products Not Regulated by Statutory Regulations Equity b. Use of contract standards that do not comply with statutory regulations or best practice Value of Contracts Using Contract Standards Not Compliant with Statutory Regulations or Best Practice Total Contract Value
Weakness in agreements or cooperation
a. Failure to meet the validity requirements of the agreement Weaknesses in agreements made by the Infrastructure Financing Company are a source of problems or disputes later on that can pose potential legal risks for the Infrastructure Financing Company. b. There are weaknesses in contract clauses and/or failure to meet agreed requirements
c. Transaction complexity and the use of terms that are difficult to understand or unusual for the general public
d. The existence of supporting documents related to agreements made by the Infrastructure Financing Company with third parties

Parameter or Indicator Description
3. Dispute resolution process
a. Inability to execute an agreement either in whole or in part.
Clearly stated. b. Use of choice of law and legal jurisdiction in dispute resolution.
Clearly stated.
c. History of legal claims against the Infrastructure Financing Company.
Clearly stated. d. The nominal amount of the claim and the estimated losses that may be experienced by the Infrastructure Financing Company due to legal claims.
Clearly stated. e. The amount of losses experienced by the Infrastructure Financing Company due to a court decision that has permanent legal force compared to the equity of the Infrastructure Financing Company. Clearly stated. f. The possibility of similar claims arising due to the same contract standard and the estimated total losses that may arise compared to the equity of the Infrastructure Financing Company. Clearly stated.

Table II.F.2: Guidelines for Setting the Level of Inherent Risk for Legal Risk
Rating Definition
Rating 1
(Low)
Considering the business activities conducted by the Infrastructure Financing Company, the likelihood of losses faced by the Infrastructure Financing Company from legal risk is classified as very low during a certain period in the future. Examples of characteristics of Infrastructure Financing Companies that fall into rating 1 (low) include the following:
a. there are no products and/or activities of the Infrastructure Financing Company that are not regulated by statutory regulations or there are products and/or activities that are not regulated in statutory regulations in insignificant amounts; b. agreements made by the Infrastructure Financing Company are very adequate; and
c. there are no litigation processes occurring in the Infrastructure Financing Company or there are litigation processes but the frequency and/or financial impact of the claims do not significantly disrupt the financial condition of the Infrastructure Financing Company and do not have a major impact on the reputation of the Infrastructure Financing Company.
Rating 2
(Medium Low)
Considering the business activities conducted by the Infrastructure Financing Company, the likelihood of losses faced by the Infrastructure Financing Company from legal risk is classified as low during a certain period in the future. Examples of characteristics of Infrastructure Financing Companies that fall into rating 2 (medium low) include the following:
a. there are products and/or activities that are not regulated in statutory regulations in less than significant amounts. b. agreements made by the Infrastructure Financing Company are adequate; and
c. there are litigation processes occurring in the Infrastructure Financing Company but the frequency and/or financial impact of the claims are less than significant in disrupting the financial condition of the Infrastructure Financing Company and are less impactful on the reputation of the Infrastructure Financing Company.

Rating Definition

Rating 3
(Medium)
Considering the business activities conducted by the Infrastructure Financing Company, the likelihood of losses faced by the Infrastructure Financing Company from legal risk is classified as quite high during a certain period in the future. Examples of characteristics of Infrastructure Financing Companies that fall into rating 3 (medium) include the following:
a. there are products and/or activities that are not regulated in statutory regulations in quite significant amounts. b. agreements made by the Infrastructure Financing Company are quite adequate; and
c. there are litigation processes occurring in the Infrastructure Financing Company with a frequency and/or financial impact of claims that are quite significant but less disruptive to the financial condition of the Company although there is a possibility of emerging reputational risk for the Infrastructure Financing Company.
Rating 4
(Medium High)
Considering the business activities conducted by the Infrastructure Financing Company, the likelihood of losses faced by the Infrastructure Financing Company from legal risk is classified as high during a certain period in the future. Examples of characteristics of Infrastructure Financing Companies that fall into rating 4 (medium high) include the following:
a. there are products and/or activities that are not regulated in statutory regulations in significant amounts. b. agreements made by the Infrastructure Financing Company are less than adequate; and
c. there are litigation processes occurring in the Infrastructure Financing Company and the frequency and/or financial impact of the claims are significant so that if the Infrastructure Financing Company loses, compensation for the claim can disrupt the financial condition of the Infrastructure Financing Company and have a major impact on the reputation of the Infrastructure Financing Company.
Rating 5
(High)
Considering the business activities conducted by the Infrastructure Financing Company, the likelihood of losses faced by the Infrastructure Financing Company from legal risk is classified as very high during a certain period in the future.

Rating Definition

Examples of characteristics of Infrastructure Financing Companies that fall into rating 5 (high) include the following:
a. there are products and/or activities that are not regulated in statutory regulations in very significant amounts; b. agreements made by the Infrastructure Financing Company are inadequate; and
c. there are litigation processes against the Infrastructure Financing Company by customers or debtors of the Infrastructure Financing Company in a frequency and/or financial impact that is very significant so that if the Infrastructure Financing Company is defeated in a court decision, this condition can significantly affect the business condition of the Infrastructure Financing Company.

Table II.F.3: Guidelines for Setting the Quality of Risk Management Implementation for Legal Risk
Rating Definition
Rating 1
(Strong)
The quality of risk management implementation for legal risk is very adequate, there are minor weaknesses that are not significant so they can be ignored.
Examples of characteristics of Infrastructure Financing Companies that fall into rating 1 (strong) include the following:
a. the formulation of the level of risk to be taken (risk appetite) and risk tolerance is very adequate and has been aligned with overall strategic objectives and business strategy; b. the Board of Directors, Board of Commissioners, and/or DPS have a very good awareness and understanding regarding risk management for legal risk, sources of legal risk, and the level of legal risk in the Infrastructure Financing Company;
c. the risk management culture for legal risk is very strong and has been internalized very well at all levels of the organization;
d. the implementation of duties by the Board of Directors, Board of Commissioners, and/or DPS is overall very adequate; e. the risk management function for legal risk is independent, has clear duties and responsibilities, and has been running very well; f. delegation of authority is controlled and monitored periodically, and has been running very well; g. management strategy for legal risk is very aligned with the level of risk to be taken and risk tolerance; h. policies, procedures, and the establishment of limits for legal risk are very adequate and available for all areas of risk management for legal risk, aligned with implementation, and well understood by employees;
i. the risk management process for legal risk is very adequate in identifying, measuring, monitoring, and controlling legal risk;
j. the management information system for legal risk is very good so as to produce legal risk reports to the Board of Directors, Board of Commissioners, and/or DPS;

Rating Definition

k. human resources are very adequate in terms of quantity and quality in the risk management function for legal risk;
l. the internal control system is very effective in supporting the implementation of risk management for legal risk;
m. the implementation of independent reviews by the internal audit unit and functions conducting independent reviews is very adequate in terms of methodology, frequency, and reporting to the Board of Directors, Board of Commissioners, and/or DPS; n. generally there are no significant weaknesses based on the results of independent reviews; and o. follow-up on the independent review has been carried out very adequately. Rating 2 (Somewhat Strong) The quality of risk management implementation for legal risk is adequate although there are some minor weaknesses that can be resolved in normal business activities. Examples of characteristics of Infrastructure Financing Companies that fall into rating 2 (somewhat strong) include the following:
a. the formulation of the level of risk to be taken (risk appetite) and risk tolerance is adequate and has been aligned with overall strategic objectives and business strategy; b. the Board of Directors, Board of Commissioners, and/or DPS have a good awareness and understanding regarding risk management for legal risk, sources of legal risk, and the level of legal risk in the Infrastructure Financing Company;
c. the risk management culture for legal risk is strong and has been internalized well at all levels of the organization;
d. the implementation of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally adequate, there are some weaknesses but not significant and can be improved immediately; e. the risk management function for legal risk has clear duties and responsibilities and has been running well, but there are minor weaknesses that can be resolved in normal business activities; f. delegation of authority is controlled and monitored periodically, g. management strategy for legal risk is aligned with

Rating Definition

the level of risk to be taken (risk appetite) and risk tolerance; h. policies, procedures, and the establishment of limits for legal risk are adequate and available for all areas of risk management for legal risk, aligned with implementation, and well understood by employees although there are minor weaknesses;
i. the risk management process for legal risk is adequate in identifying, measuring, monitoring, and controlling legal risk;
j. the management information system for legal risk is good including legal risk reporting to the Board of Directors, Board of Commissioners, and/or DPS, but there are minor weaknesses that can be easily improved; k. human resources are adequate in terms of quantity and quality in the risk management function for legal risk;
l. the internal control system is effective in supporting the implementation of risk management for legal risk;
m. the implementation of independent reviews by the internal audit unit and functions conducting independent reviews is adequate in terms of methodology, frequency, and reporting to the Board of Directors, Board of Commissioners, and/or DPS; n. there are weaknesses but not significant based on the results of independent reviews; and o. follow-up on the independent review has been carried out adequately. Rating 3 (Adequate) The quality of risk management implementation for legal risk is quite adequate. Although minimum requirements are met, there are some weaknesses that require management attention. Examples of characteristics of Infrastructure Financing Companies that fall into rating 3 (adequate) include the following:
a. the formulation of the level of risk to be taken (risk appetite) and risk tolerance is quite adequate but not always aligned with overall strategic objectives and business strategy; b. the Board of Directors, Board of Commissioners, and/or DPS have a quite good awareness and understanding regarding risk management for legal risk, sources of legal risk, and the level of legal risk in the Infrastructure Financing Company;

Rating Definition

c. the risk management culture for legal risk is quite strong and has been internalized quite well but not always implemented consistently;
d. the implementation of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally quite adequate, but there are weaknesses in some aspects of assessment that need to receive management attention; e. the risk management function for legal risk is quite good, but there are some weaknesses including reporting to the Board of Directors, Board of Commissioners, and/or DPS that require management attention; f. delegation of authority is quite good, but control and monitoring are not always carried out well; g. management strategy for legal risk is quite aligned with the level of risk to be taken (risk appetite) and risk tolerance; h. policies, procedures, and the establishment of limits for legal risk are quite adequate but not always consistent with implementation;
i. the risk management process for legal risk is quite adequate in identifying, measuring, monitoring, and controlling legal risk;
j. the management information system for legal risk meets minimum expectations but there are some weaknesses including reporting to the Board of Directors, Board of Commissioners, and/or DPS that require management attention; k. human resources are quite adequate in terms of quantity and quality in the risk management function for legal risk;
l. the internal control system is quite effective in supporting the implementation of risk management for legal risk;
m. the implementation of independent reviews by the internal audit unit and functions conducting independent reviews is quite adequate, but there are some weaknesses in methodology, frequency, and/or reporting to the Board of Directors, Board of Commissioners, and/or DPS that require management attention; n. there are weaknesses that are quite significant based on the results of independent reviews that require management attention; and o. follow-up on the independent review has been carried out quite adequately.

Rating Definition

Rating 4
(Somewhat Weak)
The quality of risk management implementation for legal risk is less than adequate, there are significant weaknesses in various aspects of risk management for legal risk that require immediate corrective action. Examples of characteristics of Infrastructure Financing Companies that fall into rating 4 (somewhat weak) include the following:
a. the formulation of the level of risk to be taken (risk appetite) and risk tolerance is less than adequate and not aligned with overall strategic objectives and business strategy; b. there are significant weaknesses in the awareness and understanding of the Board of Directors, Board of Commissioners, and/or DPS regarding risk management for legal risk, sources of legal risk, and the level of legal risk in the Infrastructure Financing Company;
c. the risk management culture for legal risk is not strong and has not been well internalized at every level of the organization;
d. the implementation of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally less than adequate, there are weaknesses in various aspects of assessment that require immediate improvement; e. there are significant weaknesses in the risk management function for legal risk that require immediate improvement; f. delegation of authority is weak, not controlled and not monitored well; g. management strategy for legal risk is less aligned with the level of risk to be taken (risk appetite) and risk tolerance; h. there are significant weaknesses in policies, procedures, and the establishment of limits for legal risk;
i. the risk management process for legal risk is less than adequate in identifying, measuring, monitoring, and controlling legal risk;
j. there are significant weaknesses in the management information system for legal risk including reporting to the Board of Directors, Board of Commissioners, and/or DPS that require immediate improvement; k. human resources are less than adequate in terms of quantity and quality in the risk management function for legal risk;
l. the internal control system is less effective in

Rating Definition Rating supports the implementation of risk management for legal risk; m. the implementation of independent review by the internal audit unit and functions conducting independent review is inadequate, there are weaknesses in methodology, frequency, and/or reporting to the Board of Directors, Board of Commissioners, and/or DPS that require immediate improvement; n. there are significant weaknesses based on the results of independent review that require immediate corrective action; and o. follow-up on independent review is inadequate.

Rating 5
(Weak)
The quality of risk management implementation for legal risk is inadequate, there are significant weaknesses in various aspects of legal risk management whose resolution is beyond the capacity of management. Examples of characteristics of Infrastructure Financing Companies included in Rating 5 (weak) are as follows:
a. the formulation of the level of risk to be taken (risk appetite) and risk tolerance is inadequate and there is no connection with strategic objectives and overall business strategy; b. the awareness and understanding of the Board of Directors, Board of Commissioners, and/or DPS regarding legal risk management, legal risk sources, and the level of legal risk in the Infrastructure Financing Company is very weak;
c. the legal risk management culture is not strong or does not exist at all;
d. the implementation of duties by the Board of Directors, Board of Commissioners, and/or DPS is inadequate, there are significant weaknesses in almost all aspects of assessment and the resolution is beyond the capacity of the Infrastructure Financing Company; e. there are significant weaknesses in the legal risk management function that require fundamental improvement; f. delegation of authority is very weak or non-existent; g. management strategy for legal risk is not aligned with the level of risk to be taken and risk tolerance; h. there are very significant weaknesses in policies,

Rating Definition Rating procedures, and setting limits for legal risk;
i. the legal risk management process is inadequate in identifying, measuring, monitoring, and controlling legal risk;
j. there are very significant weaknesses in the management information system for legal risk; k. human resources are inadequate in terms of quantity and quality in the legal risk management function;
l. the internal control system is ineffective in supporting the implementation of legal risk management;
m. the implementation of independent review by the internal audit unit and functions conducting independent review is insufficient or inadequate, there are weaknesses in methodology, frequency, and/or reporting to the Board of Directors, Board of Commissioners, and/or DPS that require fundamental improvement; n. there are very significant weaknesses based on the results of independent review whose corrective actions o. follow-up on independent review is inadequate

Table II.G.1: Parameters or Indicators for Assessing Inherent Compliance Risk
Parameter or Indicator Description

Type and significance
of violations committed a. Type of violation or non-compliance committed by the Infrastructure Financing Company The scope of violations constitutes violations of legislative regulations and commitments to the Financial Services Authority including sanctions imposed for violations committed by the Infrastructure Financing Company. Violations or non-compliance with the application of Sharia principles include violations of fatwas issued by the DSN or other standards that are generally applicable in the Sharia financial sector. b. The number of fine sanctions imposed on the Infrastructure Financing Company by authorities
c. Significance of the violation
d. Behavior underlying the violation e. Type of violation or non-compliance with the application of Sharia principles committed by the Infrastructure Financing Company whether based on findings by DPS or authorities
Frequency of violations
(including sanctions) or non-compliance track record of the Infrastructure Financing Company a. Type and frequency of the same violations found each year in the last 3 (three) years. Frequency is more historical by looking at the compliance trend of the Infrastructure Financing Company over the last 3 (three) years to know whether the type of violation committed is repeated or whether no significant improvement has been made by the Infrastructure Financing Company for that error. b. Significance of the same violation.

Parameter or Indicator Description
3. Violations of
legislative regulations, regulations applicable to the Infrastructure Financing Company, or generally applicable business standards Frequency of violations of regulations because they do not comply with legislative regulations or standards generally applicable. An example is violations of among others tax regulations, accounting standards, codes of ethics, or other standards that are generally applicable in the financial services sector.
4. Follow-up on
violations, including fulfillment of the action plan submitted to the Financial Services Authority Follow-up on violations of legislative regulations including fulfillment of the action plan submitted to the Financial Services Authority and other authorities. After a violation of regulations occurs whether identified by the Financial Services Authority or by the Infrastructure Financing Company, the next step that can be used as evaluation material and evidence of mitigation to reduce the risk of the Infrastructure Financing Company is the steps taken by the Infrastructure Financing Company to complete improvements to the violations committed. If the sanction requires the Infrastructure Financing Company to prepare an action plan (action plan) then if the action plan is not implemented according to the target and/or not done and/or done but not in accordance then the compliance risk of the Infrastructure Financing Company will be even higher.

Table II.G.2: Guidelines for Setting the Level of Inherent Compliance Risk
Rating Definition Rating
Rating 1
(Low)
Considering the business activities conducted by the Infrastructure Financing Company, the potential losses faced by the Infrastructure Financing Company from compliance risk are classified as very low during a certain period of time in the future. Examples of characteristics of Infrastructure Financing Companies included in Rating 1 (low) are as follows:
a. there are no violations of legislative regulations; b. the compliance track record of the Infrastructure Financing Company has been very good;
c. the Infrastructure Financing Company has implemented
all applicable business standards and codes of ethics; and d. there are no violations of Sharia principles regarding the operational of Sharia financing disbursement and funding activities of the Infrastructure Financing Company. Rating 2 (Medium Low) Considering the business activities conducted by the Company, Infrastructure Financing Company the potential losses faced by the Infrastructure Financing Company from compliance risk are classified as low during a certain period of time in the future. Examples of characteristics of Infrastructure Financing Companies included in Rating 2 (medium low) are as follows:
a. there are violations of legislative regulations that are relatively minor and can be immediately corrected by the Infrastructure Financing Company (less significant); b. the compliance track record of the Infrastructure Financing Company has been good;
c. the Infrastructure Financing Company has implemented
almost all applicable business standards and codes of ethics (there are less significant violations); and d. there are relatively minor violations of Sharia principles regarding the operational of Sharia financing disbursement and activities of the Infrastructure Financing Company's funding (less significant). Rating 3 (Medium) Considering the business activities of the Company Infrastructure Financing Company, the potential losses faced by the Infrastructure Financing Company from Compliance Risk

Rating Definition Rating are classified as quite high during a certain period of time in the future.
Examples of characteristics of Infrastructure Financing Companies included in Rating 3 (medium) are as follows:
a. there are violations of legislative regulations that are quite significant and require management attention; b. the compliance track record of the Infrastructure Financing Company has been less good;
c. there are quite significant violations of the applicable
business standards and codes of ethics; and d. there are quite significant violations of Sharia principles regarding the operational of Sharia financing disbursement and funding activities of the Infrastructure Financing Company. Rating 4 (Medium High) Considering the business activities conducted by the Infrastructure Financing Company, the potential losses faced by the Infrastructure Financing Company from compliance risk are classified as high during a certain period of time in the future. Examples of characteristics of Infrastructure Financing Companies included in Rating 4 (medium high) are as follows:
a. there are significant violations of legislative regulations that require immediate corrective action; b. the compliance track record of the Infrastructure Financing Company has been poor;
c. there are significant violations of business standards and codes
of ethics applicable; and d. there are significant violations of Sharia principles regarding the operational of Sharia financing disbursement and activities of the Infrastructure Financing Company's funding. Rating 5 (High) Considering the business activities conducted by the Infrastructure Financing Company, the potential losses faced by the Infrastructure Financing Company from compliance risk are classified as very high during a certain period of time in the future. Examples of characteristics of Infrastructure Financing Companies included in Rating 5 (high) are as follows:
a. there are very significant violations of legislative regulations that require immediate improvement; b. the compliance track record of the Infrastructure Financing Company

Rating Definition Rating has been very poor;
c. there are very significant violations of business
standards and codes of ethics applicable; and d. there are very significant violations of Sharia principles regarding the operational of Sharia financing disbursement and funding activities of the Infrastructure Financing Company.

Table II.G.3: Guidelines for Setting the Quality of Compliance Risk Management Implementation
Rating Definition Rating
Rating 1
(Strong)
The quality of compliance risk management implementation is very adequate, there are minor weaknesses that are not significant so they can be ignored.
Examples of characteristics of Infrastructure Financing Companies included in Rating 1 (strong) are as follows:
a. the formulation of the level of risk to be taken (risk appetite) and risk tolerance (risk tolerance) is very adequate and has been aligned with strategic objectives and overall business strategy; b. the Board of Directors, Board of Commissioners, and/or DPS have awareness and understanding that is very good regarding compliance risk management, compliance risk sources, and the level of compliance risk in the Infrastructure Financing Company;
c. the compliance risk management culture is very
strong and has been internalized very well at all levels of the organization; d. the implementation of duties by the Board of Directors, Board of Commissioners, and/or DPS as a whole is very adequate; e. the compliance risk management function is independent, has clear duties and responsibilities, and has been running very well; f. delegation of authority is controlled and monitored periodically, and has been running very well; g. management strategy for compliance risk is very aligned with the level of risk to be taken (risk appetite) and risk tolerance (risk tolerance); h. policies, procedures, and setting limits for compliance risk are very adequate and available for all areas of compliance risk management, aligned with implementation, and well understood by employees;
i. the compliance risk management process is very
adequate in identifying, measuring, monitoring, and controlling compliance risk; j. the management information system for compliance risk is very good so as to generate compliance risk reports that are comprehensive and integrated to the Board of Directors, Board of Commissioners, and/or DPS;

Rating Definition Rating k. human resources are very adequate in terms of quantity and quality in the compliance risk management function;
l. the internal control system is very effective in
supporting the implementation of compliance risk management; m. the implementation of independent review by the internal audit unit and functions conducting independent review is very adequate in terms of methodology, frequency, and reporting to the Board of Directors, Board of Commissioners, and/or DPS; n. generally there are no significant weaknesses based on the results of independent review; and o. follow-up on independent review has been implemented very adequately. Rating 2 (Rather Strong) The quality of compliance risk management implementation is adequate although there are some minor weaknesses that can be resolved in normal business activities. Examples of characteristics of Infrastructure Financing Companies included in Rating 2 (rather strong) are as follows:
a. the formulation of the level of risk to be taken (risk appetite) and risk tolerance (risk tolerance) is adequate and has been aligned with strategic objectives and overall business strategy; b. the Board of Directors, Board of Commissioners, and/or DPS have awareness and understanding that is good regarding compliance risk management, compliance risk sources, and the level of compliance risk in the Infrastructure Financing Company;
c. the compliance risk management culture is strong
and has been internalized well at all levels of the organization; d. the implementation of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally adequate, there are some weaknesses but not significant and can be corrected immediately; e. the compliance risk management function has clear duties and responsibilities and has been running well, but there are minor weaknesses that can be resolved in normal business activities; f. delegation of authority is controlled and monitored periodically, g. management strategy for compliance risk is aligned

Rating Definition Rating with the level of risk to be taken (risk appetite) and risk tolerance (risk tolerance); h. policies, procedures, and setting limits for compliance risk are adequate and available for all areas of compliance risk management, aligned with implementation, and well understood by employees although there are minor weaknesses;
i. the compliance risk management process is adequate
in identifying, measuring, monitoring, and controlling compliance risk; j. the management information system for compliance risk is good including compliance risk reporting to the Board of Directors, Board of Commissioners, and/or DPS, but there are minor weaknesses that can be easily corrected; k. human resources are adequate in terms of quantity and quality in the compliance risk management function;
l. the internal control system is effective in supporting
the implementation of compliance risk management; m. the implementation of independent review by the internal audit unit and functions conducting independent review is adequate in terms of methodology, frequency, and reporting to the Board of Directors, Board of Commissioners, and/or DPS; n. there are weaknesses but not significant based on the results of independent review; and o. follow-up on independent review has been implemented adequately. Rating 3 (Adequate) The quality of compliance risk management implementation is adequately adequate. Although minimum requirements are met, there are some weaknesses that require management attention. Examples of characteristics of Infrastructure Financing Companies included in Rating 3 (adequate) are as follows:
a. the formulation of the level of risk to be taken (risk appetite) and risk tolerance (risk tolerance) is adequate but not always aligned with strategic objectives and overall business strategy; b. the Board of Directors, Board of Commissioners, and/or DPS have awareness and understanding that is adequately good regarding compliance risk management, compliance risk sources, and the level of compliance risk in the Infrastructure Financing Company;

Rating Definition Rating
c. the compliance risk management culture is adequately
strong and has been internalized adequately but not always implemented consistently; d. the implementation of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally adequately adequate, but there are weaknesses in some aspects of assessment that need to receive management attention; e. the compliance risk management function is adequately good, but there are some weaknesses including reporting to the Board of Directors, Board of Commissioners, and/or DPS that requires management attention; f. delegation of authority is adequately good, but control and monitoring are not always implemented well; g. management strategy for compliance risk is adequately aligned with the level of risk to be taken (risk appetite) and risk tolerance (risk tolerance); h. policies, procedures, and setting limits for compliance risk are adequately adequate but not always consistent with implementation;
i. the compliance risk management process is adequately
adequate in identifying, measuring, monitoring, and controlling compliance risk; j. the management information system for compliance risk meets minimum expectations but there are some weaknesses including reporting to the Board of Directors, Board of Commissioners, and/or DPS that requires management attention; k. human resources are adequately adequate in terms of quantity and quality in the compliance risk management function;
l. the internal control system is adequately effective in
supporting the implementation of compliance risk management; m. the implementation of independent review by the internal audit unit and functions conducting independent review is adequately adequate, but there are some weaknesses in methodology, frequency, and/or reporting to the Board of Directors, Board of Commissioners, and/or DPS that requires management attention; n. there are weaknesses that are adequately significant based on the results of independent review that require management attention; and o. follow-up on independent review has been implemented adequately.

Rating Definition Rating
Rating 4
(Rather Weak)
The quality of compliance risk management implementation for compliance risk is less adequate, there are significant weaknesses in various aspects of compliance risk management that require immediate corrective action. Examples of characteristics of Infrastructure Financing Companies included in Rating 4 (rather weak) are as follows:
a. the formulation of the level of risk to be taken (risk appetite) and risk tolerance (risk tolerance) is less adequate and not aligned with strategic objectives and overall business strategy; b. there are significant weaknesses in awareness (awareness) and understanding of the Board of Directors, Board of Commissioners, and/or DPS regarding compliance risk management, compliance risk sources, and the level of compliance risk in the Infrastructure Financing Company;
c. the compliance risk management culture is less
strong and has not been internalized well at each level of the organization; d. the implementation of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally less adequate, there are weaknesses in various aspects of assessment that require immediate improvement; e. there are significant weaknesses in the compliance risk management function that require immediate improvement; f. delegation of authority is weak, not controlled and not monitored well; g. management strategy for compliance risk is less aligned with the level of risk to be taken (risk appetite) and risk tolerance (risk tolerance); h. there are significant weaknesses in policies, procedures, and setting limits for compliance risk;
i. the compliance risk management process is less
adequate in identifying, measuring, monitoring, and controlling compliance risk; j. there are significant weaknesses in the management information system for compliance risk including reporting to the Board of Directors, Board of Commissioners, and/or DPS that requires immediate improvement; k. human resources are less adequate in terms of quantity and quality in the compliance risk management function;
l. the internal control system is less effective in

Rating Definition Rating supporting the implementation of compliance risk management for compliance risk; m. the implementation of independent review by the internal audit unit and functions conducting independent review is less adequate, there are weaknesses in methodology, frequency, and/or reporting to the Board of Directors, Board of Commissioners, and/or DPS that requires immediate improvement; n. there are significant weaknesses based on the results of independent review that require immediate corrective action; and o. follow-up on independent review is less adequate. Rating 5 (Weak) The quality of compliance risk management implementation for compliance risk is inadequate, there are significant weaknesses in various aspects of compliance risk management whose resolution is beyond the capacity of management. Examples of characteristics of Infrastructure Financing Companies included in Rating 5 (weak) are as follows:
a. the formulation of the level of risk to be taken (risk appetite) and risk tolerance (risk tolerance) is inadequate and there is no connection with strategic objectives and overall business strategy; b. the awareness (awareness) and understanding of the Board of Directors, Board of Commissioners, and/or DPS is very weak regarding compliance risk management, compliance risk sources, and the level of compliance risk in the Infrastructure Financing Company;
c. the compliance risk management culture is not
strong or does not exist at all; d. the implementation of duties by the Board of Directors, Board of Commissioners, and/or DPS is inadequate, there are significant weaknesses in almost all aspects of assessment and the action and resolution is beyond the capacity of the Infrastructure Financing Company; e. there are significant weaknesses in the compliance risk management function that require fundamental improvement; f. delegation of authority is very weak or non-existent; g. management strategy for compliance risk is not aligned with the level of risk to be taken (risk appetite) and risk tolerance (risk tolerance); h. there are very significant weaknesses in policies,

Rating Definition Rating

procedures, and setting limits for compliance risk;
i. the risk management process for compliance risk is inadequate in identifying, measuring, monitoring, and controlling compliance risk;
j. there are fundamental weaknesses in the information management system for compliance risk; k. human resources are inadequate in both quantity and quality in the risk management function for compliance risk;
l. the internal control system is ineffective in supporting the implementation of risk management for compliance risk;
m. the implementation of independent review by the internal audit unit and functions performing independent review is insufficient or inadequate, there are weaknesses in methodology, frequency, and/or reporting to the Board of Directors, Board of Commissioners, and/or DPS that require fundamental improvement; n. there are very significant weaknesses based on the results of independent review whose corrective actions o. follow-up on independent review is inadequate

Table II.H.1: Parameters or Indicators for Assessing Inherent Risk for Reputational Risk

Parameter or Indicator	Description
1. Influence of reputation of managers, owners, and group	a. Credibility of managers, owners, and related companies<br>Credibility is assessed among others from negative news regarding the managers, shareholders of the Infrastructure Financing Company, and/or related companies with the Infrastructure Financing Company.<br>Reputational events are assessed among others from negative events faced by the Infrastructure Financing Company, such as bankruptcy applications against the Infrastructure Financing Company.<br>b. Reputational events affecting managers, owners, and related companies
2. Violation of business ethics	Violations of ethics are visible among others in:<br>a. transparency of financial information; and<br>b. business cooperation with other stakeholders<br>It should be noted that in the event the Infrastructure Financing Company violates ethics or general business norms.
3. Complexity of products and business cooperation	a. Number and level of consumer usage of complex products and/or services of the Infrastructure Financing Company<br>Complex products and/or services and cooperation with business partners can be exposed to reputational risk in cases where:<br>1. there is misunderstanding in the use of products and/or services;<br>2. commitments regarding products, services, or business cooperation agreed upon with business partners; or<br>3. negative reporting on business partners.<br>b. Number and materiality of cooperation of the Infrastructure Financing Company with business partners
4. Frequency, materiality, and exposure of negative reporting	a. Frequency and materiality of negative reporting about the Infrastructure Financing Company within 1 (one) year<br>The frequency, type of media, and materiality of negative reporting of the Infrastructure Financing Company, including the managers of the Infrastructure Financing Company.<br>b. Type of media and scope of reporting
5. Frequency and materiality of complaints from debtors or consumers.	a. Frequency of complaints from debtors or consumers<br>The frequency of complaints from debtors or consumers can be assessed through the following calculation:<br>Number of complaints from debtors or consumers within 1 (one) year<br>Number of debtors or consumers at year-end position<br>b. Materiality of complaints from debtors or consumers

Table II.H.2: Guidelines for Setting Inherent Risk Levels for Reputational Risk

Rating	Definition	Rating
Rating 1 (Low)	Considering the business activities conducted by the Infrastructure Financing Company, the potential losses faced by the Infrastructure Financing Company from reputational risk are classified as very low during a certain period in the future.<br><br>Examples of characteristics of Infrastructure Financing Companies included in Rating 1 (low) include the following:<br>a. generally there is no negative reputational influence from managers, shareholders of the Infrastructure Financing Company, and related companies, even it is expected that managers, shareholders of the Infrastructure Financing Company, and related companies can provide a very positive influence on the reputation of the Infrastructure Financing Company;<br>b. violations or potential violations of business ethics are very minimal (not significant), the Infrastructure Financing Company has a reputation as an Infrastructure Financing Company that highly upholds business ethics;<br>c. products and/or services of the Infrastructure Financing Company are simple and easy for customers to understand;<br>d. the number and value of business cooperation conducted with business partners are not significant; and<br>e. the frequency, nature, and scope of negative reporting are not significant.
Rating 2 (Low-Medium)	Considering the business activities conducted by the Infrastructure Financing Company, the potential losses faced by the Infrastructure Financing Company from reputational risk are classified as low during a certain period in the future.<br><br>Examples of characteristics of Infrastructure Financing Companies included in Rating 2 (low-medium) include the following:<br>a. there is negative reputational influence from managers, shareholders of the Infrastructure Financing Company, and related companies but the scale of influence is small (not significant) and can be well mitigated;<br>b. violations or potential violations of business ethics are not significant and the Infrastructure Financing Company has a reputation as an Infrastructure Financing Company that upholds business ethics;
Rating 3 (Medium)	Considering the business activities conducted by the Infrastructure Financing Company, the potential losses faced by the Infrastructure Financing Company from reputational risk are classified as moderately high during a certain period in the future.<br><br>Examples of characteristics of Infrastructure Financing Companies included in Rating 3 (medium) include the following:<br>a. there is negative reputational influence from managers, shareholders of the Infrastructure Financing Company, and related companies with a moderately significant scale of influence but still controllable;<br>b. violations or potential violations of business ethics occur but the scale of influence is moderately significant and requires management attention;<br>c. products and/or services of the Infrastructure Financing Company are moderately complex so that to a certain extent require special understanding by customers;<br>d. the number and value of business cooperation conducted with business partners are moderately significant; and<br>e. the frequency, nature, and scope of negative reporting are moderately significant.
Rating 4 (Medium-High)	Considering the business activities conducted by the Infrastructure Financing Company, the potential losses faced by the Infrastructure Financing Company from reputational risk are classified as high during a certain period in the future.<br><br>Examples of characteristics of Infrastructure Financing Companies included in Rating 4 (medium-high) include the following:<br>a. there is negative reputational influence from managers, shareholders of the Infrastructure Financing Company, and related companies with a significant scale of influence and requiring special management attention;<br>b. violations or potential violations of business ethics occur with a significant scale of influence and requiring special attention;
Rating 5 (High)	Considering the business activities conducted by the Infrastructure Financing Company, the potential losses faced by the Infrastructure Financing Company from reputational risk are classified as very high during a certain period in the future.<br><br>Examples of characteristics of Infrastructure Financing Companies included in Rating 5 (high) include the following:<br>a. there is negative reputational influence from managers, shareholders of the Infrastructure Financing Company, and related companies with a very significant scale of influence and requiring immediate follow-up and management;<br>b. violations or potential violations of business ethics occur with a very significant scale of influence and requiring immediate follow-up and management;<br>c. products and/or services of the Infrastructure Financing Company are very complex and very much require special understanding by customers;<br>d. the number and value of business cooperation conducted with business partners are very significant; and<br>e. the frequency, nature, and scope of negative reporting are very significant.

Table II.H.3: Guidelines for Setting the Quality of Risk Management Implementation for Reputational Risk

Rating	Definition	Rating
Rating 1 (Strong)	The quality of risk management implementation for reputational risk is very adequate, there are minor weaknesses that are not significant so they can be ignored.<br><br>Examples of characteristics of Infrastructure Financing Companies included in Rating 1 (strong) include the following:<br>a. the formulation of the level of risk to be taken (risk appetite) and risk tolerance is very adequate and has aligned with overall strategic objectives and business strategy;<br>b. the Board of Directors, Board of Commissioners, and/or DPS have very good awareness and understanding regarding risk management for reputational risk, sources of reputational risk, and the level of reputational risk in the Infrastructure Financing Company;<br>c. the risk management culture for reputational risk is very strong and has been internalized very well at all organizational levels;<br>d. the implementation of duties by the Board of Directors, Board of Commissioners, and/or DPS overall is very adequate;<br>e. the risk management function for reputational risk is independent, has clear duties and responsibilities, and has operated very well;<br>f. delegation of authority is controlled and monitored periodically, and has operated very well;<br>g. management strategy for reputational risk is very aligned with the level of risk to be taken and risk tolerance;<br>h. policies, procedures, and setting of limits for reputational risk are very adequate and available for all areas of risk management for reputational risk, aligned with implementation, and well understood by employees;<br>i. the risk management process for reputational risk is very adequate in identifying, measuring, monitoring, and controlling reputational risk;<br>j. the information management system for reputational risk is very good so as to generate reputational risk reports that are [incomplete in source, likely: reported to Board of Directors, Board of Commissioners, and/or DPS];<br>k. human resources are very adequate in both quantity and quality in the risk management function for reputational risk;
Rating 2 (Fairly Strong)	The quality of risk management implementation for reputational risk is adequate although there are some minor weaknesses that can be resolved in normal business activities.<br><br>Examples of characteristics of Infrastructure Financing Companies included in Rating 2 (fairly strong) include the following:<br>a. the formulation of the level of risk to be taken (risk appetite) and risk tolerance is adequate and has aligned with overall strategic objectives and business strategy;<br>b. the Board of Directors, Board of Commissioners, and/or DPS have good awareness and understanding regarding risk management for reputational risk, sources of reputational risk, and the level of reputational risk in the Infrastructure Financing Company;<br>c. the risk management culture for reputational risk is strong and has been internalized well at all organizational levels;<br>d. the implementation of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally adequate, there are some weaknesses but not significant and can be repaired immediately;<br>e. the risk management function for reputational risk has clear duties and responsibilities and has operated well, but there are minor weaknesses that can be resolved in normal business activities;<br>f. delegation of authority is controlled and monitored [incomplete in source];<br>g. management strategy for reputational risk is aligned with the level of risk to be taken and risk tolerance;<br>h. policies, procedures, and setting of limits for reputational risk are adequate and available for all areas of risk management for reputational risk, aligned with implementation, and well understood by employees although there are minor weaknesses;<br>i. the risk management process for reputational risk is adequate in identifying, measuring, monitoring, and controlling reputational risk;<br>j. the information management system for reputational risk is good including reporting of reputational risk to the Board of Directors, Board of Commissioners, and/or DPS, but there are minor weaknesses that can be easily repaired;<br>k. human resources are adequate in both quantity and quality in the risk management function for reputational risk;<br>l. the internal control system is effective in supporting the implementation of risk management for reputational risk;<br>m. the implementation of independent review by the internal audit unit and functions performing independent review is adequate in terms of methodology, frequency, and reporting to the Board of Directors, Board of Commissioners, and/or DPS;<br>n. there are weaknesses but not significant based on the results of independent review; and<br>o. follow-up on independent review has been implemented adequately.
Rating 3 (Sufficient)	The quality of risk management implementation for reputational risk is sufficiently adequate. Although minimum requirements are met, there are some weaknesses that require management attention.<br><br>Examples of characteristics of Infrastructure Financing Companies included in Rating 3 (sufficient) include the following:<br>a. the formulation of the level of risk to be taken (risk appetite) and risk tolerance is sufficiently adequate but not always aligned with overall strategic objectives and business strategy;<br>b. the Board of Directors, Board of Commissioners, and/or DPS have sufficiently good awareness and understanding regarding risk management for reputational risk, sources of reputational risk, and the level of reputational risk in the Infrastructure Financing Company;<br>c. the risk management culture for reputational risk is sufficiently strong and has been internalized sufficiently well but not always implemented consistently;<br>d. the implementation of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally sufficiently adequate, but there are weaknesses in some assessment aspects that need to receive management attention;<br>e. the risk management function for reputational risk is sufficiently good, but there are some weaknesses including reporting to the Board of Directors, Board of Commissioners, and/or DPS that require management attention;<br>f. delegation of authority is sufficiently good, but control and monitoring are not always implemented well;<br>g. management strategy for reputational risk is sufficiently aligned with the level of risk to be taken and risk tolerance;<br>h. policies, procedures, and setting of limits for reputational risk are sufficiently adequate but not always consistent with implementation;<br>i. the risk management process for reputational risk is sufficiently adequate in identifying, measuring, monitoring, and controlling reputational risk;<br>j. the information management system for reputational risk meets minimum expectations but there are some weaknesses including reporting to the Board of Directors, Board of Commissioners, and/or DPS that require management attention;<br>k. human resources are sufficiently adequate in both quantity and quality in the risk management function for reputational risk;<br>l. the internal control system is sufficiently effective in supporting the implementation of risk management for reputational risk;<br>m. the implementation of independent review by the internal audit unit and functions performing independent review is sufficiently adequate, but there are some weaknesses in methodology, frequency, and/or reporting to the Board of Directors, Board of Commissioners, and/or DPS that require management attention;<br>n. there are weaknesses that are sufficiently significant based on the results of independent review that require management attention; and<br>o. follow-up on independent review has been implemented
sufficiently adequately.
Rating 4 (Fairly Weak)	The quality of risk management implementation for reputational risk is less adequate, there are significant weaknesses in various aspects of risk management for reputational risk that require immediate corrective action.<br><br>Examples of characteristics of Infrastructure Financing Companies included in Rating 4 (fairly weak) include the following:<br>a. the formulation of the level of risk to be taken (risk appetite) and risk tolerance is less adequate and not aligned with overall strategic objectives and business strategy;<br>b. there are significant weaknesses in the awareness and understanding of the Board of Directors, Board of Commissioners, and/or DPS regarding risk management for reputational risk, sources of reputational risk, and the level of reputational risk in the Infrastructure Financing Company;<br>c. the risk management culture for reputational risk is not strong and has not been internalized well at every organizational level;<br>d. the implementation of duties by the Board of Directors, Board of Commissioners, and/or DPS is generally less adequate, there are weaknesses in various assessment aspects that require immediate improvement;<br>e. there are significant weaknesses in the risk management function for reputational risk that require immediate improvement;<br>f. delegation of authority is weak, not controlled and not monitored well;<br>g. management strategy for reputational risk is less aligned with the level of risk to be taken and risk tolerance;<br>h. there are significant weaknesses in policies, procedures, and setting of limits for reputational risk;<br>i. the risk management process for reputational risk is less adequate in identifying, measuring, monitoring, and controlling reputational risk;<br>j. there are significant weaknesses in the information management system for reputational risk including reporting to the Board of Directors, Board of Commissioners, and/or DPS that require immediate improvement;<br>k. human resources are less adequate in terms of quantity and quality in the risk management function for reputational risk;<br>l. the internal control system is less effective in supporting the implementation of risk management for reputational risk;
Rating 5 (Weak)	The quality of risk management implementation for reputational risk is inadequate, there are significant weaknesses in various aspects of risk management for reputational risk whose resolution is beyond the capability of management.<br><br>Examples of characteristics of Infrastructure Financing Companies included in Rating 5 (weak) include the following:<br>a. the formulation of the level of risk to be taken (risk appetite) and risk tolerance is inadequate and there is no connection with overall strategic objectives and business strategy;<br>b. the awareness and understanding of the Board of Directors, Board of Commissioners, and/or DPS regarding risk management for reputational risk, sources of reputational risk, and the level of reputational risk in the Infrastructure Financing Company is very weak;<br>c. the risk management culture for reputational risk is not strong or does not exist at all;<br>d. the implementation of duties by the Board of Directors, Board of Commissioners, and/or DPS is inadequate, there are significant weaknesses in almost all assessment aspects and the actions and resolution are beyond the capability of the Infrastructure Financing Company;<br>e. there are significant weaknesses in the risk management function for reputational risk that require fundamental improvement;<br>f. delegation of authority is very weak or non-existent;<br>g. management strategy for reputational risk is not aligned with the level of risk to be taken and risk tolerance;<br>h. there are very significant weaknesses in policies, procedures, and setting of limits for reputational risk;

Rating	Definition	Rating
Rating 5 (Weak)	...
	i. the risk management process for reputational risk is inadequate in identifying, measuring, monitoring, and controlling reputational risk;<br>j. there are fundamental weaknesses in the information management system for reputational risk;<br>k. human resources are inadequate in both quantity and quality in the risk management function for reputational risk;<br>l. the internal control system is ineffective in supporting the implementation of risk management for reputational risk;<br>m. the implementation of independent review by the internal audit unit and functions performing independent review is insufficient or inadequate, there are weaknesses in methodology, frequency, and/or reporting to the Board of Directors, Board of Commissioners, and/or DPS that require fundamental improvement;<br>n. there are very significant weaknesses based on the results of independent review whose corrective actions<br>o. follow-up on independent review is inadequate

Table II.I: Guidelines for Setting Risk Levels for Each Type of Risk Analysis

Risk Rating:
Final conclusion regarding the level of risk of the Infrastructure Financing Company that includes inherent risk level and the quality of risk management implementation so as to describe the level of risk of the Infrastructure Financing Company.

Inherent Risk:
Description regarding the assessment of inherent risk based on analysis of assessment factors using both quantitative indicators and qualitative indicators so as to describe the inherent risk level of the Infrastructure Financing Company.

Quality of Risk Management Implementation: Analysis of the quality of risk management implementation consists of risk governance, risk management framework, risk management process, human resources, and information management system, as well as risk control.

Table II.J: Format for Determining Risk Profile Rating
Risk Type
Inherent Risk Level
Risk Management Implementation Quality Level
Risk Level
Strategic Risk
Operational Risk
Credit Risk
Market Risk
Liquidity Risk
Legal Risk
Compliance Risk
Reputational Risk
Composite Rating Risk Profile Rating

Table II.K: Guidelines for Determining Risk Profile Factor Ratings
Rating Definition
Rating 1 The risk profile of an Infrastructure Financing Company included in this rating generally has the following characteristics:
a. considering the business activities conducted by the Infrastructure Financing Company, the likelihood of losses faced by the Infrastructure Financing Company from composite inherent risk is classified as very low during a certain period in the future; and b. the quality of composite risk management implementation is very adequate, in case there are minor weaknesses, such weaknesses can be ignored.

Rating 2 The risk profile of an Infrastructure Financing Company included in this rating generally has the following characteristics:
a. considering the business activities conducted by the Infrastructure Financing Company, the likelihood of losses faced by the Infrastructure Financing Company from composite inherent risk is classified as low during a certain period in the future; and b. the quality of composite risk management implementation is adequate, in case there are minor weaknesses, such weaknesses require management attention.

Rating 3 The risk profile of an Infrastructure Financing Company included in this rating generally has the following characteristics:
a. considering the business activities conducted by the Infrastructure Financing Company, the likelihood of losses faced by the Infrastructure Financing Company from composite inherent risk is classified as moderately high during a certain period in the future; and b. the quality of composite risk management implementation is moderately adequate, although minimum requirements are met, there are some weaknesses that require management attention and improvement.

Rating 4 The risk profile of an Infrastructure Financing Company included in this rating generally has the following characteristics:
a. considering the business activities conducted by the Infrastructure Financing Company, the likelihood of losses faced by the Infrastructure Financing Company from composite inherent risk is classified as high during a certain period in the future; and b. the quality of composite risk management implementation is less adequate, there are significant weaknesses in various aspects of risk management that require immediate corrective action.

Rating 5 The risk profile of an Infrastructure Financing Company included in this rating generally has the following characteristics:
a. considering the business activities conducted by the Infrastructure Financing Company, the likelihood of losses faced by the Infrastructure Financing Company from composite inherent risk is classified as very high during a certain period in the future; and b. the quality of composite risk management implementation is inadequate, there are significant weaknesses in various aspects of risk management whose resolution is beyond management's capability.

This copy is consistent with the original
Legal Director 1
Legal Department signed
Mufli Asmawidjaja

Rating Definition a. considering the business activities conducted by the Infrastructure Financing Company, the likelihood of losses faced by the Infrastructure Financing Company from composite inherent risk is classified as high during a certain period in the future; and b. the quality of composite risk management implementation is less adequate, there are significant weaknesses in various aspects of risk management that require immediate corrective action.

Established in Jakarta on 11 November 2021
EXECUTIVE HEAD OF SUPERVISOR OF INSURANCE, PENSION FUNDS, FINANCING INSTITUTIONS, AND OTHER FINANCIAL SERVICE INSTITUTIONS FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA, signed RISWINANDI

APPENDIX III
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA NUMBER 27 /SEOJK.05/2021 CONCERNING ASSESSMENT OF THE HEALTH LEVEL OF INFRASTRUCTURE FINANCING COMPANIES

ASSESSMENT OF PROFITABILITY FACTOR
HEALTH LEVEL OF INFRASTRUCTURE FINANCING COMPANIES
Table III.A: Parameters or Indicators for Assessing the Profitability Factor
Table III.B: Guidelines for Determining Profitability Factor Ratings 12

Filling Instructions:

The parameters or indicators for assessing the profitability factor in Appendix III are minimum standards that must be used in conducting the assessment of the profitability factor.
Infrastructure Financing Companies may add other parameters or indicators according to the characteristics and complexity of the business of the Infrastructure Financing Company.
Assessment is conducted per position and period for the last 12 (twelve) months for parameters or indicators that are quantitative.
For certain parameters or indicators, assessment can be conducted by considering trends for at least a period of 3 (three) years.
In assessing the capital factor of an Infrastructure Financing Company on a consolidated basis, parameters or indicators for assessing the profitability factor of the Infrastructure Financing Company on an individual basis can be used, adjusted to the scale, characteristics, and complexity of the Subsidiary's business.

Table III.A: Parameters or Indicators for Assessing the Profitability Factor
Parameter or Indicator Description

Performance of the Infrastructure Financing Company in generating profit (profitability)
a. Return on asset (RoA). Profit or Loss Before Tax Average Total Assets Description:

Profit or loss before tax is calculated based on the amount of income minus the amount of expenses before deducting the estimate of income tax.
For the calculation of total assets, the average asset per end-of-month position for the last 12 (twelve) months is used. For example, for the March 2020 report position, the calculation method is as follows (Sum of total assets from April 2019 to March 2020)/12.
In the event that there is an Infrastructure Financing Company that has operated for less than 12 (twelve months) since the business license was issued by the Financial Services Authority, the calculation of total assets uses the average asset per end-of-month position for the number of months that have been operated. b. Return on equity (RoE). Net Profit After Tax Average Total Equity Description:
Net profit or loss is calculated based on the amount of income minus the amount of expenses after deducting the estimate of income tax.

Parameter or Indicator Description
2) For the calculation of total equity, the average equity per end-of-month position for the last 12 (twelve) months is used. For example, for the March 2020 report position, the calculation method is as follows (Sum of total equity April 2019 to March 2020)/12.
In the event that there is an Infrastructure Financing Company that has operated for less than 12 (twelve months) since the business license was issued by the Financial Services Authority, the calculation of total equity uses the average equity per end-of-month position for the number of months that have been operated.
c. Operating expenses to operating income (BOPO).
Operating Expenses
Operating Income
Description:
The details of operating income and operating expense accounts in the calculation of the operating expense to operating income ratio refer to the Circular Letter of the Financial Services Authority regarding monthly reports of Infrastructure Financing Companies. d. Net interest margin (NIM).

For Infrastructure Financing Companies:
Net Interest Income
Average Financing Receivables

Parameter or Indicator Description
2) For Islamic Infrastructure Financing Companies and UUS:
Net Financing Income
Average Productive Assets
Description:

Net interest income is obtained from the result of subtracting interest income with interest expenses.
Net financing income is obtained from operating income derived from Islamic financing which includes margin, profit sharing, and/or service fees after being reduced by expenses from funding activities.
For the calculation of the average financing receivables per end-of-month position for the last 12 (twelve) months. For example, for the March 2020 report position, the calculation method is as follows: (Sum of Total Financing Receivables April 2019 to March 2020)/12.
In the event that there is an Infrastructure Financing Company that has operated for less than 12 (twelve months) since the business license was issued by the Financial Services Authority, the calculation of the average financing receivables per end-of-month position is for the number of months that have been operated.

Parameter or Indicator Description e. Net operating margin. 1) For Infrastructure Financing Companies:
Interest Income - Operating Expenses
Average Financing Receivables
2) For Islamic Infrastructure Financing Companies and UUS:
Financing Income - Operating Expenses
Average Productive Assets
Description:

Financing Income is financing income after being reduced by funding expenses and operating expenses (annualized).
Operating expenses are operating expenses including expenses from funding activities annualized.
Average financing receivables/productive assets is the calculation of total financing receivables/productive assets using the average financing receivables/productive assets throughout the year.

Parameter or Indicator Description f. Cost to Efficiency Ratio (CER)

For Infrastructure Financing Companies:
Operating Expenses (Non-interest) X100%
Net Interest Income + Other Non-interest Income
For Islamic Infrastructure Financing Companies and UUS:
Operating Expenses (Non-financing) X100%
Net Financing Income + Other Non-financing Income Description:
Cost to Efficiency Ratio (CER) is a ratio used to measure how large non-interest/non-financing costs are incurred by an Infrastructure Financing Company/Islamic Infrastructure Financing Company/UUS to generate net interest/financing income and other income besides interest/financing income. g. Performance of actual profit components (profitability) against budget projections. Actual Profit Component Performance (Profitability) Budget Projections Description:
Performance on profit components (profitability) is a comparison between realization and budget projections for income statement accounts, including operating income, operating expenses, non-operating income, non-operating expenses, and net profit.

Parameter or Indicator Description
2. Sources supporting profitability
a. Ratio of net interest income to average total assets.

For Infrastructure Financing Companies:
Net Interest Income
Average Total Assets
Islamic Infrastructure Financing Companies and UUS:
Net Financing Income
Average Total Assets
Description:
Average total assets is the calculation of total assets using the average total assets throughout the year. b. Ratio of operating income other than interest income (net) to average total assets.
For Infrastructure Financing Companies:
Operating Income other than Interest Income (net) Average Total Assets
Islamic Infrastructure Financing Companies and UUS:
Operating Income other than Financing Income (net) Average Total Assets

Parameter or Indicator Description
Description:
Average total assets is the calculation of total assets using the average total assets throughout the year.
c. Ratio of overhead expenses to average total assets.
Overhead Expenses
Average Total Assets
Description:
Overhead expenses are all operating expenses that are not interest/financing expenses.
Average total assets is the calculation of total assets using the average total assets throughout the year. d. Ratio of provisioning expenses to average total assets.
Provisioning Expenses
Average Total Assets
Description:
Average total assets is the calculation of total assets using the average total assets throughout the year. e. Net noncore earnings components to average total assets.
Net Noncore Earnings Components
Average Total Assets
Description:

Net noncore earnings components are noncore earnings minus noncore expenses.
Noncore earnings are the sum of income from the sale of fixed assets, foreign currency translation gains, insurance claims, rental income, and other income.
Noncore expenses are the sum of losses from the sale of fixed assets, foreign currency translation losses, insurance claim losses, rental expenses, and other expenses.
Average total assets is the calculation of total assets using the average total assets throughout the year.

Continuity of components supporting profitability
a. Core RoA. Primary Core Net Income – Operating Discretionary Items Average Total Assets Description:

Primary core net income is primary core income minus primary core expense (annualized).
Primary core income is net interest/financing income plus fee-based income (annualized).
Primary core expense is overhead expenses, namely operating expenses other than interest/financing expenses and impairment losses (annualized).
Operating discretionary items are impairment losses (annualized).

Parameter or Indicator Description b. Future profitability projections.
Future profitability projections are an analysis of profitability component projections (operating income, operating expenses, net profit) over a 5 (five) year period ahead accompanied by considerations.

Table III.B: Guidelines for Determining Profitability Factor Ratings
Rating Definition
Rating 1 Profitability is very adequate, profit exceeds targets, and supports capital growth.
Infrastructure Financing Companies included in Rating 1 meet all or most of the example characteristics as follows:
a. the performance of the Infrastructure Financing Company in generating profit (profitability) is very adequate; b. the main source of profitability derived from financing business activities is very dominant; and
c. the ability of profit to increase capital and profit prospects in the future are very high.

Rating 2 Profitability is adequate, profit exceeds targets, and supports capital growth.
Infrastructure Financing Companies included in Rating 2 meet all or most of the example characteristics as follows:
a. the performance of the Infrastructure Financing Company in generating profit or profitability is adequate; b. the main source of profitability derived from financing business activities is dominant; and
c. the ability of profit to increase capital and profit prospects in the future are high.

Rating 3 Profitability is moderately adequate, profit meets targets, although there is pressure on profit performance that may cause a decrease in profit but still sufficiently supports the capital growth of the Infrastructure Financing Company. Infrastructure Financing Companies included in Rating 3 meet all or most of the example characteristics as follows:
a. the performance of the Infrastructure Financing Company in generating profit or profitability is moderately adequate; b. the main source of profitability derived from financing business activities is moderately dominant but there is a considerable influence from activities other than financing business and Islamic financing; and
c. the ability of profit to increase capital and profit prospects in the future is moderately good.

Rating 4 Profitability is less adequate, profit does not meet targets, and is estimated to remain in such conditions in the future so as to less support capital growth and the continuity of business of the Infrastructure Financing Company.

This copy is consistent with the original
Legal Director 1
Legal Department signed
Mufli Asmawidjaja

Rating Definition
Infrastructure Financing Companies included in Rating 4 meet all or most of the example characteristics as follows:
a. the performance of the Infrastructure Financing Company in generating profit or profitability is less adequate or the Infrastructure Financing Company incurs losses; b. the main source of profitability derives from activities other than financing business; and
c. the ability of profit to increase capital and profit prospects in the future is less good or can even have a negative effect on the capital of the Infrastructure Financing Company.

Rating 5 Profitability is inadequate, profit does not meet targets and is unreliable, and immediately requires an increase in profit performance to ensure the continuity of business of the Infrastructure Financing Company. Infrastructure Financing Companies included in Rating 5 meet all or most of the example characteristics as follows:
a. the Infrastructure Financing Company incurs significant losses; b. the main source of profitability derives from activities other than financing business; and
c. the losses of the Infrastructure Financing Company significantly affect capital.

APPENDIX IV
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA NUMBER 27 /SEOJK.05/2021 CONCERNING ASSESSMENT OF THE HEALTH LEVEL OF INFRASTRUCTURE FINANCING COMPANIES

ASSESSMENT OF CAPITAL FACTOR
HEALTH LEVEL OF INFRASTRUCTURE FINANCING COMPANIES
Table IV.A: Parameters or Indicators for Assessing the Capital Factor
Table IV.B: Determination of Risk Weighting of Exposures
Based on Rating
Table IV.C: Guidelines for Determining Capital Factor Ratings

Filling Instructions:

The parameters or indicators for assessing the capital factor in Appendix IV are minimum standards that must be used in conducting the assessment of the capital factor.
Infrastructure Financing Companies may add other parameters or indicators according to the characteristics and complexity of the business of the Infrastructure Financing Company.
Assessment is conducted per position and period for the last 12 (twelve) months for parameters or indicators that are quantitative.
For certain parameters or indicators, assessment can be conducted by considering trends for at least a period of 3 (three) years.
In assessing the capital factor of an Infrastructure Financing Company on a consolidated basis, parameters or indicators for assessing the capital factor of the Infrastructure Financing Company on an individual basis can be used, adjusted to the scale, characteristics, and complexity of the Subsidiary's business.

Table IV.A: Parameters or Indicators for Assessing the Capital Factor
Parameter or Indicator Description

Capital Adequacy
a. Capital Ratio
Adjusted Capital
Adjusted Assets
Description:

Adjusted capital is the sum of the following capital components:
(1) adjusted equity consisting of:
(a) paid-in capital;
(b) additional paid-in capital, which is the sum of:
i. share premium/discount;
ii. equity issuance costs; and
iii. others in accordance with accounting standards principles;
(c) transaction differences from restructuring of entities under common control; (d) retained earnings/losses; (e) 50% (fifty percent) of current year profit/loss after tax; (f) treasury stock; and (g) other equity components, which is the sum of:
i. changes in revaluation surplus;
ii. exchange differences due to translation of financial statements in foreign currency;
iii. gains and losses from re-measurement of available-for-sale financial assets;
iv. the effective portion of gains and losses on hedging instruments in cash flow hedges; and
v. other equity components in accordance with accounting standards principles,
with considering reducing factors such as:
(a) deferred tax calculation;
(b) goodwill;
(c) other intangible assets; and
(d) all equity participations in subsidiaries; (2) Subordinated loans (qardh) at most 50% (fifty percent) of paid-in capital meeting the following criteria:
(a) with a term of at least 5 (five) years;
(b) in the event of liquidation, the claim right applies last among all existing loans; and (c) stipulated in the form of a notarial deed agreement between the Infrastructure Financing Company and the lender.
Adjusted assets are the assets of the Infrastructure Financing Company multiplied by the asset risk weights as follows:
No. Component Risk Weight
(1) (2)

Cash and cash equivalents 0%
Deposits at
Bank Indonesia 0%

Parameter or Indicator Description
3. Deposits at
banks a. guaranteed by
Central Government and Bank Indonesia 0% b. not guaranteed 20%
4. Investments in
Securities a. Securities issued by Central Government or Bank Indonesia 0% b. Securities issued and guaranteed with cash, foreign currency, gold, gold currency, and current accounts, deposits and savings equal to the value of the guarantee 0%
c. Securities issued
by donor country governments and multilateral financial institutions 50% d. Other Securities 100%
5. Financing
Financing given to or guaranteed by:
a. Central bank; 0% b. Central Government 0%
c. cash, foreign currency,
gold, gold currency, and current accounts, deposits and savings equal to the value of the guarantee 0% d. Bank 50% e. Regional Governments and non-ministerial institutions in Indonesia 20% f. State-Owned Enterprises 50% g. Other parties 100%
6. Equity Participation 100%
7. Other Assets 100%
3) In the calculation of adjusted assets in the form of financing, the basis for the nominal value of financing receivables is the outstanding principal of financing minus the reserves that have been formed. Outstanding principal of financing is the total claims minus:
a) unearned interest income; and b) other income and expenses related to financing transactions that are amortized. b. Ratio of problematic financing receivables to paid-in capital. Problematic Financing Receivables - CKPN Problematic Financing Receivables Paid-in Capital + General Reserve
c. Ratio of low-quality receivables to paid-in capital.
Low-Quality Financing Receivables

CKPN for Low-Quality Financing Receivables
Paid-in Capital + General Reserve
Description:
What is meant by low-quality financing receivables is

Parameter or Indicator Description financing with collectibility in special attention. d. Capital Adequacy Infrastructure Financing Company to anticipate potential losses according to risk profile. The assessment of capital adequacy of Infrastructure Financing Companies to anticipate potential losses according to risk profile is carried out by considering among others:

inherent risk;
quality of risk management implementation;
risk level; and
risk profile rating of the Infrastructure Financing Company both individually and consolidated.
Capital adequacy assessment with anticipating potential losses according to risk profile can be carried out through stress testing analysis.

Capital Management
a. Capital Management
Infrastructure Financing Company
This includes the understanding of the Board of Directors and Board of Commissioners, capital management policies and procedures, capital planning, capital adequacy assessment, and independent party review. b. Ability to access capital viewed from internal sources and external sources

Capital access from internal sources among others comes from profitability performance that supports capital.
Capital access from external sources among others comes from the capital market and parent company (owner).

Table IV.B: Determination of Risk Weight of Exposure Based on Rating
Table 1. Determination of Risk Weight of Claims to Government
Type of Claim
Equivalent Rating
AAA to AA- A+ to A- BBB+ to BBB- BB+ to B- Less than B Claims to Indonesian Government Claims to Other Governments 20% 20% 50% 100% 150%
Table 2. Determination of Risk Weight of Claims to Public Sector Entities*
Equivalent Rating
AAA to AA- A+ to A- BBB+ to BBB- BB+ to B- Less than B Risk Weight 20% 50% 50% 100% 150% ) The Public Sector Entities referred to are Local Governments, non-ministerial institutions in Indonesia, and/or State-Owned Enterprises
Table 3. Determination of Risk Weight of Claims to Banks
Type of Claim
Equivalent Rating
AAA to AA- A+ to A- BBB+ to BBB- BB+ to B- Less than B Long-Term Claims 20% 50% 50% 100% 150% Short-Term Claims 20% 20% 50% 50% 150%

) Long-Term Claims are claims with an agreement term of more than 3 (three) months. Claims to Banks with an agreement term up to 3 (three) months but can be assured to be extended (roll-over) so that the total term becomes more than 3 (three) months, are classified as Long-Term Claims. ) Short-Term Claims are claims with an agreement term up to 3 (three) months, including claims that do not have a maturity date but can be withdrawn at any time.
Table 4. Determination of Risk Weight of Claims to Corporations
Equivalent Rating
AAA to AA- A+ to A- BBB+ to BBB- BB+ to B- Less than B Risk Weight 20% 50% 100% 100% 150%
Table 5. Determination of Risk Weight of Securities with Short-Term Ratings
Equivalent Rating
A-1 A-2 A-3 Less than A-3
Risk Weight 20% 50% 100% 150%

*) Short-Term Ratings are used to determine the risk weight of securities that have short-term ratings and are issued by parties included in the scope of claims to banks or claims to corporations. Determination of risk weight for Claims to Banks classified as Short-Term Claims in Table 3 in the form of securities but do not have short-term ratings, refers to long-term ratings according to Table 3. Determination of risk weight for Claims to Corporations that do not have short-term ratings, refers to long-term ratings according to Table 4.

Table IV.C: Guidelines for Determining Capital Factor Ratings
Rating Definition
Rating 1 Infrastructure Financing Company has very adequate capital quality and adequacy relative to the risk profile accompanied by very strong capital management in accordance with the characteristics, business scale, and business complexity of the Infrastructure Financing Company. Infrastructure Financing Companies included in Rating 1 meet all or most of the following example characteristics:
a. Infrastructure Financing Company has very adequate capital levels, very capable of anticipating all risks faced, and supporting the expansion of the Infrastructure Financing Company's business in the future; b. capital component quality is generally very good, permanent, and able to absorb losses;
c. Infrastructure Financing Company has conducted stress testing with results that can cover all risks faced very adequately;
d. Infrastructure Financing Company has very good capital management and/or has a very good capital adequacy assessment process in accordance with business strategy and objectives as well as the complexity and scale of the Infrastructure Financing Company; and e. Infrastructure Financing Company has very good access to capital sources and/or has capital support from the business group or parent company (owner). Rating 2 Infrastructure Financing Company has adequate capital quality and adequacy relative to the risk profile, accompanied by strong management in accordance with the characteristics, business scale, and business complexity of the Infrastructure Financing Company. Infrastructure Financing Companies included in Rating 2 meet all or most of the following example characteristics:
a. Infrastructure Financing Company has adequate capital levels and can anticipate almost all risks faced; b. capital component quality is generally good, permanent, and able to absorb losses;

Rating Definition
c. Infrastructure Financing Company has conducted stress testing with results that can cover all risks faced adequately;
d. Infrastructure Financing Company has good capital management and/or has a good capital adequacy assessment process in accordance with business strategy and objectives as well as the complexity and scale of the Infrastructure Financing Company; and e. Infrastructure Financing Company has good access to capital sources and/or there is capital support from the business group or parent company (owner). Rating 3 Infrastructure Financing Company has fairly adequate capital quality and adequacy relative to the risk profile accompanied by fairly strong capital management in accordance with the characteristics, business scale, and business complexity of the Infrastructure Financing Company. Infrastructure Financing Companies included in Rating 3 meet all or most of the following example characteristics:
a. Infrastructure Financing Company has fairly adequate capital levels, and is fairly capable of anticipating risks faced; b. capital component quality is generally fairly good, fairly permanent, and fairly able to absorb losses;
c. Infrastructure Financing Company has conducted stress testing with results that can cover all risks faced fairly adequately;
d. Infrastructure Financing Company has fairly good capital management and/or has a fairly good capital adequacy assessment process in accordance with business strategy and objectives as well as the complexity and scale of the Infrastructure Financing Company; and e. Infrastructure Financing Company has fairly good access to capital sources, however support from the business group or parent company (owner) is not done explicitly. Rating 4 Infrastructure Financing Company has inadequate capital quality and adequacy relative to the risk profile, accompanied by weak capital management compared to the characteristics, business scale, and business complexity of the Infrastructure Financing Company.

Rating Definition
Infrastructure Financing Companies included in Rating 4 meet all or most of the following example characteristics:
a. Infrastructure Financing Company has inadequate capital levels and cannot anticipate all risks faced; b. capital component quality is generally not good, not permanent, and not able to absorb losses;
c. Infrastructure Financing Company has conducted stress testing with results that are not able to cover all risks faced;
d. Infrastructure Financing Company has not good capital management and/or has a not good capital adequacy assessment process in accordance with business strategy and objectives as well as the complexity and scale of the Infrastructure Financing Company; and e. Infrastructure Financing Company is not able to access capital sources, and there is no support from the business group or parent company (owner). Rating 5 Infrastructure Financing Company has inadequate capital quality and adequacy relative to the risk profile, accompanied by very weak capital management compared to the characteristics, business scale, and business complexity of the Infrastructure Financing Company. Infrastructure Financing Companies included in Rating 5 meet all or most of the following example characteristics:
a. Infrastructure Financing Company has inadequate capital levels, so the Infrastructure Financing Company must add capital to anticipate all risks faced under normal conditions and under crisis conditions; b. capital instrument quality is generally not good, not permanent, and not able to absorb losses;
c. Infrastructure Financing Company has conducted stress testing with results that are not able to cover all risks faced;
d. Infrastructure Financing Company has not good capital management and/or has a not good capital adequacy assessment process in accordance with business strategy and objectives as well as the complexity and scale of the Infrastructure Financing Company; and

This copy is consistent with the original
Legal Director 1
Legal Department signed
Mufli Asmawidjaja
Rating Definition e. Infrastructure Financing Company is not able to access capital sources and there is no support from the business group or parent company (owner).
Established in Jakarta on November 11, 2021
EXECUTIVE HEAD OF SUPERVISOR OF INSURANCE, PENSION FUNDS, FINANCING INSTITUTIONS, AND OTHER FINANCIAL SERVICE INSTITUTIONS FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA, signed RISWINANDI

APPENDIX V
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA NUMBER 27 /SEOJK.05/2021 REGARDING ASSESSMENT OF THE HEALTH LEVEL OF INFRASTRUCTURE FINANCING COMPANIES

Guidelines for Determining Composite Health Level Ratings of Infrastructure Financing Companies Rating Explanation PK-1 Reflects the condition of the Infrastructure Financing Company that is generally very healthy so it is assessed as very capable of facing significant negative influences from changes in business conditions and other external factors reflected in the assessment factor ratings, among which are the implementation of good corporate governance, risk profile, profitability, and capital which are generally very good. In case there are weaknesses, generally these weaknesses are not significant. PK-2 Reflects the condition of the Infrastructure Financing Company that is generally healthy so it is assessed as capable of facing significant negative influences from changes in business conditions and other external factors reflected in the assessment factor ratings, among which are the implementation of good corporate governance, risk profile, profitability, and capital which are generally good. In case there are weaknesses, generally these weaknesses are less significant. PK-3 Reflects the condition of the Infrastructure Financing Company that is generally fairly healthy so it is assessed as fairly capable of facing significant negative influences from changes in business conditions and other external factors reflected in the assessment factor ratings, among which are the implementation of good corporate governance, risk profile, profitability, and capital which are generally fairly good. In case there are weaknesses, generally these weaknesses are fairly significant and if not successfully overcome by management, it can disrupt the continuity of the Infrastructure Financing Company's business. PK-4 Reflects the condition of the Infrastructure Financing Company that is generally not healthy so it is assessed as not capable of facing significant negative influences from changes in business conditions and other external factors reflected in the assessment factor ratings, among which are the implementation of good corporate governance, risk profile, profitability, and capital which are generally not good. There are weaknesses that are generally significant and cannot be overcome well by management and disrupt the continuity of the Infrastructure Financing Company's business. PK-5 Reflects the condition of the Infrastructure Financing Company that is generally not healthy so it is assessed as not capable of facing significant negative influences from changes in business conditions and other external factors reflected in the assessment factor ratings, among which are the implementation of good corporate governance, risk

This copy is consistent with the original
Legal Director 1
Legal Department signed
Mufli Asmawidjaja
Rating Explanation profile, profitability, and capital which are generally not good. There are weaknesses that are generally very significant so that to overcome them, funding support from shareholders or funding sources from other parties is needed to strengthen the financial condition of the Infrastructure Financing Company. *) Applies to the Health Level Assessment of Infrastructure Financing Companies individually and consolidated. Established in Jakarta on November 11, 2021 EXECUTIVE HEAD OF SUPERVISOR OF INSURANCE, PENSION FUNDS, FINANCING INSTITUTIONS, AND OTHER FINANCIAL SERVICE INSTITUTIONS FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA, signed RISWINANDI

APPENDIX VI
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA NUMBER 27 /SEOJK.05/2021 REGARDING ASSESSMENT OF THE HEALTH LEVEL OF INFRASTRUCTURE FINANCING COMPANIES

REPORT FORMAT AND WORKING PAPER
FOR ASSESSMENT OF THE HEALTH LEVEL OF INFRASTRUCTURE FINANCING COMPANIES
Company Name : .................................................
Report letter number : .................................................
Report letter date : .................................................
Person in charge of report:
Name : .................................................
Position : .................................................
Telephone : .................................................
Electronic mail (e-mail) : .................................................
A. Report on the Results of the Health Level Assessment of Infrastructure Financing Companies No Assessment Factor Individual Rating Consolidated Rating*) 1 Good corporate governance 2 Risk profile 3 Profitability 4 Capital Health Level Rating of Infrastructure Financing Companies *) In case the Infrastructure Financing Company has Subsidiaries that are consolidated Analysis Analysis regarding the overall condition of the Infrastructure Financing Company is reflected in the four health level assessment factors as follows:

analysis of the implementation of good corporate governance;
risk profile analysis covering inherent risk, quality of risk management implementation, and risk level for each risk as well as the risk level rating;
profitability analysis; and
capital analysis.
In case the Infrastructure Financing Company has Subsidiaries that are consolidated, the Infrastructure Financing Company considers:
a. the significance or materiality of the Subsidiary's share to the Infrastructure Financing Company on a consolidated basis; and b. Subsidiary issues regarding good corporate governance, risk profile, profitability, and capital that have a significant impact on the Infrastructure Financing Company on a consolidated basis. Date : Date :
Prepared by: Approved by:
B. Assessment of the Good Corporate Governance Factor Good Corporate Governance Rating Individual Consolidated Analysis Description regarding the conclusion on the performance of good corporate governance of the Infrastructure Financing Company by considering the good corporate governance assessment factors comprehensively and structurally, covering structure, process, and outcome of good corporate governance. In case the Infrastructure Financing Company has Subsidiaries that are consolidated, the Infrastructure Financing Company considers:
a. the significance or materiality of the Subsidiary's share to the Infrastructure Financing Company on a consolidated basis; and b. Subsidiary issues regarding good corporate governance, risk profile, profitability, and capital that have a significant impact on the Infrastructure Financing Company on a consolidated basis.

C. Assessment of the Risk Profile Factor for Infrastructure Financing Companies
C.1 Assessment of the Risk Profile Factor for Infrastructure Financing Companies and Islamic Infrastructure Financing Companies Risk Profile Individual Consolidated Rating Inherent Risk Rating Quality of Risk Management Implementation Rating Risk Level Rating Inherent Risk Rating Quality of Risk Management Implementation Rating Risk Level Rating Strategic Risk Operational Risk Credit Risk Market Risk Liquidity Risk Legal Risk Compliance Risk Reputational Risk Composite Rating Risk Profile Rating Risk Profile Rating Analysis Description regarding the conclusion on the overall risk profile of the Infrastructure Financing Company includes assessment of inherent risk and quality of Risk Management implementation, with analysis focus on significant risk exposures in the Infrastructure Financing Company. In case the Infrastructure Financing Company has Subsidiaries that are consolidated, the Infrastructure Financing Company considers:
a. the significance or materiality of the Subsidiary's share to the Infrastructure Financing Company on a consolidated basis; and b. Subsidiary issues regarding good corporate governance, risk profile, profitability, and capital that have a significant impact on the Infrastructure Financing Company on a consolidated basis. C.2 Assessment of the Risk Profile Factor for Islamic Financing Units (UUS) Risk Profile UUS Inherent Risk Rating Quality of Risk Management Implementation Rating Risk Level Rating Strategic Risk Operational Risk Credit Risk Market Risk Liquidity Risk Legal Risk Compliance Risk Reputational Risk Composite Rating Risk Profile Rating Analysis Description regarding the conclusion on the overall risk profile of the UUS includes assessment of inherent risk and quality of Risk Management implementation, with analysis focus on significant risk exposures in the UUS.

This copy is consistent with the original
Legal Director 1
Legal Department signed
Mufli Asmawidjaja
D. Assessment of the Profitability Factor
Profitability Rating Individual Consolidated
Analysis
Final conclusion regarding the profitability performance of the Infrastructure Financing Company by considering the profitability assessment factors. In case the Infrastructure Financing Company has Subsidiaries that are consolidated, the Infrastructure Financing Company calculates the impact of the Subsidiary's profitability performance on the overall profitability of the Infrastructure Financing Company by considering the significance and materiality of the Subsidiary. E. Assessment of the Capital Factor Capital Rating Individual Consolidated Analysis Final conclusion regarding the capital performance of the Infrastructure Financing Company by considering the capital assessment factors. In case the Infrastructure Financing Company has Subsidiaries that are consolidated, the Infrastructure Financing Company calculates the impact of the Subsidiary's capital performance on the overall capital of the Infrastructure Financing Company by considering the significance and materiality of the Subsidiary. Established in Jakarta on November 11, 2021 EXECUTIVE HEAD OF SUPERVISOR OF INSURANCE, PENSION FUNDS, FINANCING INSTITUTIONS, AND OTHER FINANCIAL SERVICE INSTITUTIONS FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA, signed RISWINANDI

OJK Circular No. 27/SEOJK.05/2021 on Health Level Assessment of Infrastructure Financing Companies

Rating Definition Rating

Table II.H.1: Parameters or Indicators for Assessing Inherent Risk for Reputational Risk

Table II.H.2: Guidelines for Setting Inherent Risk Levels for Reputational Risk

Table II.H.3: Guidelines for Setting the Quality of Risk Management Implementation for Reputational Risk

Table II.I: Guidelines for Setting Risk Levels for Each Type of Risk Analysis

Lineage: In force