Risk management

DTEK risk management is a comprehensive system of the internal control and risk management based on the strategic and current planning, which is an integral part of the internal environment of the Company. Current approaches to risk management and opportunities are unified for all DTEK processes (a common approach to assessment, analysis, common principles of insurance, common principles to the internal control system in accordance with DTEK risk management policy, as well as a number of related regulatory documents).

All key decisions in DTEK are made with regard to risks and opportunities as well as the level of appetite for risk for them. With the aim of the risk management system development and maintenance, the Department of Internal Control and risk management and Risk Committee of the Management Board functions in the organizational structure of the Company.

DTEK systematically identifies and assesses risks and opportunities which influence the achievement of strategic and operational goals. Risks and opportunity assessment is conducted in case of significant changes in external environment.

In order to identify and minimize each group of risks to an acceptable level the following procedure is adopted:

  • Working group creation with the participation of experts in all relevant fields
  • Identification of risks on the basis of set goals and actually existed processes
  • Exposure assessment and risk ranking for materiality
  • Development and testing for effectiveness of control elements development
  • Embedding internal control elements in the processes to prevent the occurrence of risk events
  • Selection and implementation of the most efficient and cost-effective measures to reduce exposure to risk; implementation of the selection of the optimal management strategy regard to the degree of the risk reduction and the cost of activities
  • Monitoring of the activities effectiveness and the overall risk profile and opportunities of the company.

OPERATIONAL RISKS

DTEK pays special attention to operational risks. The Company introduced the process of risk identifying, assessment, management and monitoring within the framework of annual planning. The Company also has the corresponding reporting system for all groups of risks. The programs for operational risks reduction and effectiveness of production processes improvement are introduced, and the plans for accidents and emergencies elimination are developed. The audit of business processes with the analysis of the necessity and sufficiency of embedded control procedures is systematically carried out. Efficient and economically feasible controls based on risk assessment are implemented in cooperation with process owners. The insurance is actively used in order to reduce the consequences of operational risks. The Company has developed the concept of insurance protection. It is centrally implemented for the whole business by the Department of Internal Control and Risk Management that provides overall methodological approach to interaction with insurance market to optimize the amount of insurance contributions. 

The Company has introduced the mechanism of cash flow planning and management that allows to quickly respond to changes in the external and internal environment.

The insurance system protects the interests of DTEK and includes voluntary insurance (property insurance, compensation for losses in case of business interruption, medical insurance, comprehensive insurance etc.), as well as fulfilment of requirements for all compulsory types of insurance. While establishing the insurance coverage of DTEK, the degree of coverage, the optimal insurance conditions and reliability of risk distribution are taken into account. The operating activity includes measures for maintaining the given level of absolute liquidity. 

STRATEGIC RISKS

DTEK forms and implements the Company development Strategy taking into account the risk-oriented approach. Risks and additional opportunities of the Company are estimated regularly for various strategic horizons. In order to reduce risks to an acceptable level, action plans are developed.

 

The financial model of the Company’s development strategy is subjected to simulation modelling taking into account different scenarios of external environment development. Profiles of risks and opportunities of strategy goals achievement are formed. They include action plans with clearly defined terms of implementation and people responsible.

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