4. MANAGEMENT EFFICIENCY

4.1. Corporate Governance 4.2. Internal Control and Auditing 4.3. Risk Management 4.4. Property Management 4.5. Purchase Management 4.6. Quality Assurance

4.3. Risk Management

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PRINCIPLES OF AND APPROACHES TO ORGANIZATION OF RISK MANAGEMENT SYSTEM, INTERNAL REGULATORY DOCUMENTS

Development of the Corporate System for Risk Management (CSRM) by the Concern was performed in 2015 according to the Risk Management Policy.

MAJOR PRINCIPLES OF CSRM:

  • Compliance with the Concern's strategy (risk assessment is primarily carried out in view of influence on strategic goals);
  • Participation of each and every employee of the Concern in risk management in the area of his/her job duties;
  • Periodical reassessment of risks;
  • Integration into the key planning processes (strategic planning, mid-term planning, investment planning) for the most complete accounting for risks in the activities;
  • Integration of the existing practices for management of certain risk categories;
  • Transparency of the risk management process and an open dialog on possible consequences;
  • Accounting for mutual influence of all risk categories in every sphere of the Concern's activities;
  • Reliable system of information exchange among structural units;
  • Constant development with a view to achieve the targets faced by the Concern.

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CSRM GOALS AND OBJECTIVES

The main goals and objectives of the CSRM in the Concern are as follows:

  • Timely identification of the emerging risks that influence achievement of the Concern's goals;
  • Better understanding of risks and their mutual interrelation;
  • Definition of the risk owners and their responsibility;
  • Development and introduction of the procedures required for constant monitoring of risks.

MOST IMPORTANT RISKS FOR ACHIEVING CONCERN'S GOALS

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PATTERN OF RISK MANAGEMENT COMPETENCE DISTRIBUTION AMONG MANAGEMENT AND CONTROL BODIES

The Concern's CSRM is structured according to the following key principles:

  • The Concern's risk management system corresponds to the existing operation model;
  • Risk management is carried out by risk owners;
  • The functions of risk treatment measures, and their execution and efficiency control, are performed by several management bodies of the Concern;
  • Organization of the risk management system includes three management levels: strategic, tactical, and operational.

MAJOR EVENTS OF 2015 AND PROSPECTS FOR 2016

In 2015, the Concern continued improving the risk management system seeking further integration with all main processes and, first of all, with the investment planning and budgeting processes.

As part of the mentioned activities, a list of key risks was updated in a scheduled manner, aggregate influence of risks (including the risks of considerable changes in the global commodity markets) on major financial and economic indicators was assessed, scheduled monitoring of risk management measures was accomplished.

We are going to further develop the risk management system in 2016 as related to the update of methodological and regulatory support according to planned changes in the corporate structure.