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Budgeting is a crucial financial instrument in a business. Every business cannot be separated from budgeting.  The budgeting plan helps create the organization’s financial stability and preparation for unexpected challenges or risks. The unexpected challenges or risks that is embedded in a business must be forecasted for a business to be able to estimate its budgeting closely to realization and do optimization for the business’s resources. This also works the same for PT Kereta Api Indonesia (Persero) (PT KAI). PT KAI as a state-owned company who runs its business in a high-risk industry must prepare for the possible risks that might happen. This also includes the preparation of the risk budgeting. In other words, it is very important for the company to apply a risk-based budgeting framework in its budgeting. The application of risk-based budgeting framework would take risk into account in the budgeting process. This way, every single part of the possibility of events and risks that might happen will be calculated and prepared. Through this study, implementation of risk-based budgeting at PT KAI would be studied. The simulation of the implementation of the risk-based budgeting framework will also be explained and simulated in this study. In addition to the application of risk-based budgeting, this study will also solve another framework issue that the company is facing, which in this case is still related with the risk-based budgeting framework implementation. This research will use risk management procedures to predict risks in 2021 based on historical risks in 2020. This research will rely on the company's annual budgeting plan reports, internal reports, and in-depth interview reports as supporting data in reviewing and simulating the proposed risk-based budgeting framework.

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