The policy of Corporate risks management is made based on the possibilities of risks occurrence containing in financial matters in the Company as in the operations in general, law and other relevant units. Addressing such risks to occur in certain routinewell-planned activities, the Company developed the procedures to anticipate and handle if certain activity may contain a risk. Meanwhile for the new activities and which not yet having any pattern, the Company conducted a supervision and internal evaluation before posting any recommendation and making decision at Board

TYPE OF RISK AND ITS MANAGEMENT
Sritex Business has a variety of financial risks, including foreign currency risk, interest rate, credit, and liquidity. Based on risk mapping that has been done, the Company as a Corporation engaging in textile industry struggled with business risks as follows:

Foreign Currency Risk

The reporting currency of the Company in 2018 is the US Dollar. The Company did not face exchange rate risks as contained in the sale and certain purchase costs either in US Dollars or whose price is significantly affected by the movements in the benchmark price as quoted on the international market.

Interest Rate Risk

Company’s interest rate risk mainly arose from loans for working capital and investment purposes. Currently, the Company does not possess any hedging formal policy to the interest rate risk. For working capital credit and investment credit, the Company seeks to reduce its interest rate risk by always monitoring the interest rate prevailing in the market.

Credit risk

Credit risks faced by the Company derived from loans to customers. To alleviate such risk, a policy has been made to turn off product sales prevail only to customers who can be trusted and proven with good credit history. The essence of this policy is that all customers wishing to purchase on credit must meet credit verification procedures. For export sales, the Company requires payment upon delivery of sales documents. For domestic sales, the Company requires most cash receipts in advance and the rest charged on the delivery of sales documents. In addition, the balances of receivables are monitored on an ongoing basis to reduce the possibility of unbilled receivables. To reduce the risk of failure to pay on the issuance of futures deposits to bank, the Company made a policy that it shall only issue futures deposits on a bank that has a good reputation.

Liquidity risk

The Company managed its liquidity profile in seeking to fund its capital expenditures and managed due-date debt by arranging cash and the availability of funding through several sufficient committed credit facilities. The Company regularly evaluates the information of cash flow projections and actual and continually assess the condition of financial markets to identify opportunities of fundraising.

EVALUATION ON THE EFFECTIVENESS OF RISK MANAGEMENT SYSTEM The Company always makes the identification and evaluation of risk through the respective departments. As the representative of the Board of Directors, Internal Audit Unit, and the Board of Commissioners, the Audit Committee reviewed and formulated necessary management strategies and mitigation.

As a form of enforcement of good corporate governance, Sritex has set and implement a reporting system, or the Whistleblowing System in its governance structure. Whistleblowing System is reporting by employees of the Company for actions in violation of the Code of Conduct of the Company.

Basic of implementation of reporting violations in the company has been set in the Directors’ Decree No .01/ SKD-CORSEC/XII/16. The enforcement also adapt it to the circumstances of the Company and changes in legislation.

SUBMISSION OF VIOLATION REPORT
The Company committed to follow up on every complaint reported. The handling of complaints is addressed by the Committee of Good Corporate Governance, which is the committee that is in charge in managing Company’s WBS. The fraud reported by the informants (employee/management officers) shall be submitted to the following communication channels

THINGS TO BE FILLED By THE INFORMANT

To simplify and accelerate the follow-up actions, the following are things that must be met by the informant in his complaint reporting:
1. Provide information on informant identity facilitate communication with the informant, at least:

• Informant name (anonymous is allowed);
• Valid telephone number/e-mail address.

2. Must provide a reliable early indication (3W & 1H) which includes:
   Reported issues (What);
   • Parties involved (Who);
   • Time (When);
   • How did it happen (How);
3. Reports submitted relating to:

• Fraud;
  • Violations of the law;
  • Violations of company regulations;
  • Violations of the code of ethics;
  • Violation of a conflict of interest;
  • Other equated things to fraud.

PROTECTION FOR THE WHISTLEBLOWER
Sritex committed to provide protection to employee or management that has made fraud reporting. Company’s WBS keeps maintaining the confidentiality of informant identity, by providing facilities of secure and independent communication channels. Protection for whistleblowers provided by the Company, include Guarantee on the anonymity of the reporting and content of the reports submitted;

HANDLING / MANAGEMENT OF COMPLAINT
The handling or follow-up that performed in connection with the complaint which received via Whistle Blowing System are as folows:
1. President Director who is the holder of power and authority over management’s decision to receive reports to be selected and submitted to the Internal Audit Team for verification and review to provide reports/audits for incoming information.

2. The Internal Audit Team duties:
   a. Recording (registering) and classifying violation reports based on category by supporting data b. Implementing the whistleblower protection program in accordance with established policies, include maintaining the confidentiality of the whistleblower and defendant ( the presumption of innocence).
3. Maintaining  regular communication with the whistleblower
   d. Reporting the activity report every 6 months to the President Director.
4. The investigator team, consist of persons which are appointed based on ability within the Internal Audit’s work scope.
   A. As for the overall task to conduct further investigation on substance of reported violations with the aim of seeking thoroughly and collect all necessary evidences to ensure that a violation report has been committed.
5. The results from the investigation that has been performed by Internal Audit is the President Director’s full authority to provide the progress reports to Board of Commissioners to be sealed.4. Officials who have the authority to decide:
   a. Board of Commissioners, with the main task of conducting selection, confirmation (from category aspect of violation types, who performed and completeness of documents) and verify, and decide whether the report will be followed up or archived for violations committed by members of the Board of Commissioners, Board of Directors and Supporting Organs of the Board of Commissioners.
   B. Board of Directors, with main task: Selection, confirmation, evaluation (from the aspect category of violation types, who performed and the completeness of the document) and verify and decide whether the report will be followed up or archived for violations committed by the above mentioned Employees.

PARTIES THAT MANAGE THE COMPLAINT Whistleblower Management (Director)
The Board of Directors as the party to the whistleblower / complaint to convey information about the acts of deviation that indicated which occurs within the Company. The Board of Directors also plays a role to select information and incoming complaints to be forwarded to the Internal Audit Team.

Audit Internal Team
The Internal Audit Team functions is to record and classify for incoming reports. In the case of handling the whistleblower, the Internal Audit Team is responsible for maintaining the confidentiality of the reporting identity and maintaining communication with the whistleblower.

Investigation Team
Team is function to find the truth and fact by collecting the violation evidences

The Board of Commissioners and Directors
Selection, confirmation (from the category aspect of violation types, who did and completeness of the document) and verify, and decide whether the report will be followed up or filed for violations committed by members of the Board of Commissioners, Board of Directors and Board of Commissioners supporting organ and employees.