Risk Management for Non-Bank Financial Institutions Regulated in Further Detail

The Financial Services Authority (Otoritas Jasa Keuangan – “OJK”) has issued Circular Letter No. 10/SEOJK.05/2016 on Guidelines for the Implementation of Risk Management Measures and Self-Assessment for Non-Bank Financial Institutions (“Circular Letter”)
 
The Circular Letter sets out further guidelines for non-bank financial institutions (“NBFI”) for the implementation of mandatory risk-management measures, as well as for the preparation of self-assessment reports on the  implementation of such measures, as mandated under OJK Regulation No. 1/POJK.05/2015 on the Implementation of Risk-Management for Institutions (“Regulation”).[1]
 
The Circular Letter is of relevance to NBFI, and covers: insurance and reinsurance companies, insurance- and reinsurance-broker companies, insurance loss-assessor companies, pension funds, and financing companies.
                                     
Guidelinesfor Risk-Management Implementation
All NBFIs are required to establish guidelines relating to the implementation of risk-management measures in an effort to identify, monitor and control the various risks which may arise as a result of their business activities.[2] These guidelines are to be drafted by an NBFI’s board of directors (“BoD”) and to be acknowledged by an NBFI’s board of commissioners (“BoC”). Further, the guidelines must also encompass standards which relate to the following measures:[3]