Updating the Internal Control System Based on Information Technology in Mitigating the Operational Risk

The purpose of this research is to mitigate the operational risk of an insurance company through updating the internal control system based on information technology. In this study, internal control will be proxied by internal factors within the organization who have authority and responsibility related to internal control and risk management, namely the Board of Directors, Board of Commissioners, Risk Monitoring Committee, Internal Audit, and Risk Management Unit. Meanwhile, information technology is proxied by the Information Technology Steering Committee (KPTI), and operational risk is proxied by fluctuation in premium growth (SEOJK 01/ year 2021). The research design used in this study is a quantitative method using secondary data and interviews. This study uses audited financial statements from 15 insurance/reinsurance companies listed on the BEI, in 2019-2023. The reserach desain used quantitative model ,secondary data and interview. According to the discussion and interpretation of this study, the research result is as follows; the board of directors, risk monitoring committee, risk management unit have a significant effect on operational risk, while the board of commissioners and internal audit have an insignificant influence on operational risk. The board of directors, board of commissioners and risk management unit have a significant influence on information technology steering committee, while risk monitoring committee and internal audit have an insignificant influence on information technology. On the other hand, the information technology steering committee has a positive and significant influence in mitigating Operational Risk. The indirect effect of this research is that Risk Management Unit, through Information Technology Steering Committee, has a significant influence in mitigating Operational risk. As a conclusion, by updating the internal control system based on information technology and improving the competency of employee, an insurance company can mitigate operational risk.