Abstract
The Financial Services Authority (OJK) regulates PAYDI products. Life insurance companies had to audit their product specifications, sales and marketing, investment fund administration, and customer support to comply with the new rule. An enterprise risk management (ERM) strategy identifies, assesses, manages, and mitigates risks. It involves systematic and coordinated risk assessment and risk mitigation strategies. ERM ensures that the company can navigate uncertainties and achieve its goals while protecting its assets, reputation, and stakeholders.
The business issue explore the needs of Life Insurance companies to implement ERM in response to the regulatory changes introduced by SEOJK No. 5/2022 regarding PAYDI product. The research aims to identify business risks impacted by regulatory changes and to anticipate and manage these risks effectively. The research methodology is using an extensive literature review and followed by interviews with company professionals. This study employs analytical tools such as PESTEL for external analysis, SWOT for internal analysis, and Scenario Analysis to analyse external factors, internal strengths, weaknesses, opportunities, and threats, and potential risk events.
The findings indicate that risk assessment using ERM framework has improved company's risk management practices, aligning with SEOJK No. 5/2022 provisions, enhancing risk governance and ensuring compliance with regulatory requirements. The identified risks have been adequately addressed through the ERM framework, reducing vulnerability and increasing resilience to potential disruptions.
The research gives valuable insights into the practical implementation of ERM at firms in the context of regulatory changes and highlights the importance of a comprehensive risk management approach. The results encourage organization to adopt ERM practices to safeguard against emerging business risks and meet regulatory obligations effectively.