Page 136 - Annual Report KELAG Group 2018
P. 136

high availability of IT operations which is secured by data   customer. Market risks stem from changes to volumes and
           centres in different geographical locations. The high level of   prices, which develop differently than initially expected on
           qualification  of  employees,  which  is  maintained  through   the  purchasing  or  sales  side  between  the  inception  and
           appropriate employee training schedules, also constitutes   settlement of the contract. These risks are countered using
           a further basis for minimising risk in business processes. The   a high degree of standardisation for contracts as well as by
           function of a security officer was established as a central   passing the risks from the purchasing side onto the sales
           point of contact for all issues in the area of IT security.   side.  Risks  also  arise  from  changes  in  demand  due  to
                                                         economic  developments  and  changes  in  retail  customer

                                                         The  company  is  a  net  importer  of  electricity  and  has  to
           The Group is exposed to typical market competition in the
                                                         purchase additional fuels in the areas of gas and heat. It is
           Electricity/Gas,  Heat  and  Investments/Misc.  business
                                                         therefore exposed to the risk of markets not being liquid
           divisions. It operates primarily in Austria, where it competes
                                                         enough to allow corresponding commodities to be bought
           with  a  large  number  of  other  players  and  their  pricing
                                                         at economically feasible conditions at all times.
           policies as well as their established business relationships
           with customers. The company also faces competition from
                                                         Special  commodity  and  credit  risk  guidelines  have  been
           a  range  of  international  energy  companies  that  have
                                                         developed to manage market and credit risks.
           become increasingly active on the Austrian market over the
           past few years.
           The aforementioned risks are countered by means of active
           price  and  product  management,  developing  customer
           loyalty as well as targeted image and marketing activities.   In  the  case  of  hydroelectric  power,  whether  a  planned
                                                         production quantity is reached or not depends largely on
                                                         the water levels and, in turn, on the weather. Apart from
                                                         quantity, the market price level is another factor influencing
                                                         revenue. Risks are mitigated by means of a long-term sales
           The company is exposed to a number of counterparty and
                                                         strategy  and  by  updating  forecasts  of  water  levels  on  a
           credit  risks.  Third  parties  that  owe  group  entities  cash,
                                                         rolling basis.
           securities or other assets may not fulfil obligations towards
           these  group  entities  in  good  time  or  at  all  because  of
           insolvency  or  insufficient  liquidity. The  default  of  trading
           partners  or  customers  in  the  Electricity/Gas  and  Heat
           business  divisions  entails  the  risk  that  energy  already
           supplied may not be paid, that energy may have to be re-
           sourced or resold (replacement and settlement risk). Risks
                                                         The risk of defects in technical plant and equipment due to
           also  arise  due  to  changes  in  the  value  of  commodity
                                                         major widespread weather events (wind storms, wet snow)
           positions  or  changes  in  regulations  on  transfer  pricing.
                                                         is  mitigated  using  an  appropriate  maintenance  strategy
           Risks are mitigated by carrying out initial credit-worthiness
                                                         and minimised by concluding suitable insurance contracts.
           screening  and  ongoing  credit-worthiness  monitoring  in
           line with the value of contracts with each trading partner or
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