One circumstance in Indonesia is that the implementation of risk management practices widely implemented to only the financial industry and its cash assets. In the rest of the world this discipline encompasses all possible risks, theft, destruction, political risk, cash, environment, employee health, product liabilities, professional liabilities, weather, etc.  Risk Management in Indonesia has unfortunately never fully developed as elsewhere in the world.

The cultural and religious realities in SE Asia and Indonesia in particular place a very strong emphasis on “accepting one’s fate”. Everything is in the hand of God, who arranges everything for the betterment of mankind. Interfering in this process is very often felt as an act of disobedience, disrespect and sometimes as rebellious. The scope of this article is too limited to deal with this aspect in detail.

Risk Management deals with the daily lives of a lot of people and those involved in the discipline should have a great deal of respect and understanding of what is important in the lives of those whom they are trying to protect.

One of the consequences of the monetary crisis to Indonesian business is the opening up to more international ownership and influence. With that comes the requirement for companies to adjust to international business practices, including proper Risk Management. Joint venture companies may find such requirements imposed by foreign partners and have to find the necessary expertise for its implementation. Local companies will find the competitive pressure to live up to the standards hard to resist.

Other issues such as terrorism are likely to be core features of many corporate risk management strategies in Indonesia for some time to come. Facilities, plans, and procedures developed in Indonesia at key installations in the past have not been designed with the latest threats in mind. There is a pressing need to design effective security risk management strategies that address these new threats both in the immediate and foreseeable future.

The time has come for Indonesian business to make up for the lost ground in Risk Management and expand its practice from the current limited bank / cash territory to the full range of its discipline.

The world’s markets are becoming increasingly inter-related and interdependent. Strategic investment and operating considerations of ten extend beyond national borders. Critical decisions for domestic and international corporations are affected by the larger issues of national economies and political trends, as well as global financial and capital markets. Accordingly, the threats faced by multinational corporations at home and internationally derive from a combination of internal and external sources. The country executive is often challenged by an overseas head office at times ill informed or whose views on the local security situation can be heavily influenced by the domestic media. This “perception-versus-reality” struggle is an almost daily survival battle for many Jakarta based executives.

Risk Management is an international discipline, which allows businesses to properly assess the many risks they face and design appropriate solutions to either wholly prevent them or prevent them from becoming disasters. The governments should remove all protective barriers in order to allow a free flow of available knowledge and techniques. Businesses should accept their social responsibility by moving more aggressively and adjusting their operations to internationally accepted practices.

Indonesia remains an attractive country in which to do business in for many. In order to reduce vulnerability to the myriad of risks it presents, companies must take a pro-active approach to security and risk management. Doing so naturally reduces the chances of a company becoming a victim, but also minimizes the likely fallout in the event an incident were to occur. An effective risk prevention and mitigation plan will enable the company to effectively respond, recover and resume normal business operations within the shortest time frame possible so as to minimize the potential business impact either financially or from a reputation point of view.

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Duenno Ludissa, MBA

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