Control Mechanisms and Performance Measurement Standards of Pgb
Control mechanisms and performance measurement standards a) Control mechanisms
Control mechanisms can be defined as optical, mechanical, or electronic systems that are used in order to manage and control variables in a desirable way. The functions of control mechanisms generally can be categorized into planning, leading, organizing and controlling. Control mechanisms play an important role in every organization especially in enhancing the predictability of an organization. In PGB, adoption of Corporate Financial Policy (CFP) has been approved by Board with the main purpose of managing financial risk exposures of PGB which includes liquidity risk, foreign exchange risk, and counterparty risk.
The diagram above is showing that the in PGB, Risk Management Department (RMD) is required to report updates regularly to the PGB Management Committee (MC) and it will be further transferred to Board Audit Committee (BAC) in the form of the quarterly Enterprise Risk Report (ERR). In ERR, it mainly includes the overall PGB’s risk profile and status of risk mitigation implementation. Moreover, PGB INTERISK system will record all the updates such as risk mitigation actions, unexpected risk events and risk rating from its business. During this long process, we do find many clues in internal control statement of PGB annual report 2011 that PGB relies on many control mechanisms in its risk management to mitigate its financial risk. As the gas processing and gas transmission are the core business of PGB, PGB is dealing with many long term projects such as Kimanis power plant project which is expected to be completed in the end of this year or early of next year and development of the LNG regasification plant in Melaka. Hence, sophisticated and proper control mechanisms for PGB are very important in ensuring that the projects are on track as expected without any liquidity problems. Project Risk Management (PrisMa) system can be considered as a critical control mechanism
Control mechanisms can be defined as optical, mechanical, or electronic systems that are used in order to manage and control variables in a desirable way. The functions of control mechanisms generally can be categorized into planning, leading, organizing and controlling. Control mechanisms play an important role in every organization especially in enhancing the predictability of an organization. In PGB, adoption of Corporate Financial Policy (CFP) has been approved by Board with the main purpose of managing financial risk exposures of PGB which includes liquidity risk, foreign exchange risk, and counterparty risk.
The diagram above is showing that the in PGB, Risk Management Department (RMD) is required to report updates regularly to the PGB Management Committee (MC) and it will be further transferred to Board Audit Committee (BAC) in the form of the quarterly Enterprise Risk Report (ERR). In ERR, it mainly includes the overall PGB’s risk profile and status of risk mitigation implementation. Moreover, PGB INTERISK system will record all the updates such as risk mitigation actions, unexpected risk events and risk rating from its business. During this long process, we do find many clues in internal control statement of PGB annual report 2011 that PGB relies on many control mechanisms in its risk management to mitigate its financial risk. As the gas processing and gas transmission are the core business of PGB, PGB is dealing with many long term projects such as Kimanis power plant project which is expected to be completed in the end of this year or early of next year and development of the LNG regasification plant in Melaka. Hence, sophisticated and proper control mechanisms for PGB are very important in ensuring that the projects are on track as expected without any liquidity problems. Project Risk Management (PrisMa) system can be considered as a critical control mechanism