The Role of GCG in Understanding Management Control System

The implementation of BNI's GCG principles can be described as follows:

 Transparency
1. Banks disclose information in a timely, adequate, clear, accurate and comparable manner
and can be accessed by interested parties (stakeholders) in accordance with their rights.
2. The Bank discloses information which includes but is not limited to the vision, mission,
business objectives, strategy of the Bank, financial condition, composition and compensation
of the management, Controlling Shareholders, executive officers, risk management,
internal control and supervision system, compliance status, system and implementation of
good corporate governance as well as material information and facts that can influence
investors' decisions
3. The principle of openness still pays attention to the provisions of bank secrecy, job
secrecy, and personal rights according to applicable regulations.
4. Bank policies must be written and communicated to stakeholders and those who are
entitled to obtain information about the policy.
 Accountability
1. The Bank sets business targets and strategies to be accountable to stakeholders.
2. The Bank establishes a check and balance system in the management of the Bank.
3. The Bank has performance measures of all organizational organs based on agreed
measures and in line with company values (Corporate Culture Values), the Bank's business
objectives and strategies and have rewards and punishments system.
4. Banks must believe that all of the Bank's organizational organs have competence in
accordance with their responsibilities and understand its role in the implementation of good
corporate governance.
 Responsibility
1. The Bank adheres to prudential bank practices and ensures compliance with applicable
regulations apply.
2. The Bank as a good corporate citizen cares about the environment and carries out social
responsibilities fairly.
 Independence
1. The Bank avoids unreasonable domination by any stakeholders and is not affected by
unilateral interests and free from conflicts of interest.
2. The Bank makes decisions objectively and free from any pressure from any party.
 Equality and Fairness
1. The Bank pays attention to the interests of all stakeholders on the principle of equality and
fairness (equal treatment).
2. The Bank provides opportunities for all stakeholders to provide input and express opinions
for the interest of the Bank and open access to information in accordance with the principle of
transparency.
The Purposes of Good Corporate Governance Implementation
Implementation of Good Corporate Governance (GCG) in The Bank's environment aims
to:
1. Improving BNI's corporate value by implementing GCG principles consisting of
Transparency, Accountability, Responsibility, Independence and Fairness and Equality in
implementing
business so that BNI has strong competitiveness, both at the national and regional levels.
2. Encouraging every BNI organ to always emphasize the GCG culture in every decision-
making based on applicable values and norms as well as a high level of compliance with
applicable laws and regulations.
3. Improve BNI's performance through the Company's efficiency programs created by the
implementation of GCG culture in every BNI organ.
4. Increase investor confidence and place BNI as the first choice of place to invest.

The Relationship of Good Corporate Governance with Company’s Performance

The increase in GCG implementation is directly proportional to the overall improvement in
BNI's performance. Recognition from external parties in the form of various awards, both
related to BNI performance, information disclosure and also the implementation of GCG has
been obtained, including:
1. Received an award as “The Most Trusted Company” from The Indonesia Institute for
Corporate Governance on December 17, 2020, with an increase in the GCG implementation
score from 89.74 in 2019, to 90.74 in 2020. Currently there are only 13 Companies that have
the title "The Most Trusted Company".
2. Obtained the predicate as a "Very Good" company in the implementation of GCG based on
the 2020 ASEAN Corporate Governance Scorecard (ACGS) standard from the Indonesia
Institute for Corporate Directorship (IICD) on 18 December 2020. BNI's ACGS score was
97.02 (away from above the average of 100 issuers with the largest capitalization in
Indonesia with an average score of 72.88). BNI's score increased compared to 2019 from
95.61 to 97.02
3. BNI also won The Best GRC Overall for Corporate Governance & Performance 2020
(International Trade & Corporate Banking) at the GRC (Governance, Risk & Compliance) &
Performance Excellence Award 2020 on July 30, 2020 held by Businessweek Indonesia and
CEO Forum .
4. In addition, BNI received an award from the Corruption Eradication Commission (KPK) as
Rank I for the Gratification Control Unit (UPG) in the Category of State-Owned Enterprises
(BUMN) / Regional-Owned Enterprises (BUMD).

In addition to these achievements, BNI also managed to record good financial performance in
2020 as follows:
1. Interest and Sharia income decreased by 4.0% to Rp56.2 trillion.
2. Net loans disbursed increased 0.4% to Rp542.0 trillion.
3. Customer deposits increased 11.2% to Rp647.6 trillion.
4. Gross NPL was recorded at 4.3% in 2020
5. Total Assets increased by 5.4% to Rp891.3 trillion.
6. Equity decreased 9.7% to Rp112.9 trillion.
7. Profit for the year decreased 78.6% to Rp3.3 trillion.

IMPLEMENTATION OF BNI RISK MANAGEMENT

The implementation of BNI Risk Management has the following objectives:
1. Manage the risks inherent in the relatively complex products, activities and
business/business activities of BNI.
2. Provide an overview to Management regarding possible losses experienced in the future.
3. Improving methods and processes for systematic decision-making based on the availability
of information.
4. Maintain and improve the assessment of BNI's Risk Profile individually, consolidated or
integrated as a Financial Conglomerate.
5. Manage adequate capital structure to cover risks that may arise.
6. Provide a more accurate basis for measuring performance.
7. Create and maintain BNI's strategic position and reputation.
8. Creating competitive advantage and maintaining sustainable growth so as to increase BNI's
shareholder value.

BNI's Internal Control System includes:

1. Strategic control, aims to ensure that every strategy or policy that has been set is in
accordance with the objectives, vision and mission of BNI.
2. Operational control, aims to achieve operational efficiency and effectiveness.
3. Reporting control, aims to ensure the quality of each information/report produced and used
in decision making, both internal and external.
4. Compliance control, aims to ensure the level of compliance with laws, regulations and
regulations related to operations.

Control Activities according to Organizational Functions.

An effective Internal Control System requires the establishment of a control structure in
accordance with the organizational structure, which includes:
1. Management Reviews (Top Management Reviews)
The Board of Directors actively requests presentations and performance reports on a regular
basis, so that they can evaluate BNI's progress towards its goals which has been set. Goal
setting must be in accordance with risk management policies that are prepared by taking into
account the level of risk that is willing to be taken (risk appetite), level and level of risk the
type of risk that is maximum determined (risk tolerance) and the determination of the limit.
2. Operational Performance Reviews (Functional Reviews)
Periodic reviews are carried out by the Internal Audit Unit.
3. Information System Control
Includes verification of the accuracy and completeness of transactions and authorizations,
general controls and application controls.
4. Physical Asset Control
Control activities include securing assets, restricting access to computers and data files.
5. Documentation, including adequate documentation of policies, procedures, systems and
accounting standards and audit processes.