Page 41 - KELAG Annual Report 2019
P. 41

(banks) are carried out only if they have a corresponding
                                                         credit rating and an associated available credit limit.
           There are risks from the incentives regulation system in the
           regulated electricity and gas grid segment. The risk that the
                                                         In the case of the company, derivative financial instruments
           regulator might fail to factor in existing cost positions when
                                                         constitute  commodity  forwards  relating  to  energy
           setting charges is mitigated by means of active regulatory
                                                         (electricity  and  gas)  as  well  as  an  interest  hedging
           and cost management.
           In the other areas of business (production, trading, sales
           and heat), legal and regulatory risks stem from government
           intervention, such as the introduction of new duties and
           fees or the increase of existing duties and fees, and from   The Group’s activities are subject to a number of strict legal
           changes to market models that restrict business activities.   requirements aimed at protecting human life, health and
                                                         the  environment.  In  addition  to  increasingly  restrictive
                                                         regulations, there is a related financial risk for compliance
                                                         with the required measures.
           Investment  decisions  are  based  on  the  investment  and
           M&A  guideline  that  defines  clear  profitability  and  risk
           criteria.  Observance  of  high  standards  for  implementing
           investments keeps technical risks to a minimum.   Some of the risk management activities are also dedicated
                                                         to the identification and management of legal risks. To this
                                                         end, a group-wide compliance system was implemented in
                                                         cooperation  with  an  international  law  firm.  This  system
                                                         ensures  that  the  probability  of  legal  infringements  by
           Equity investment risks result from potential fluctuations in
                                                         employees  of  the  Group  is  kept  as  low  as  possible. The
           earnings  from  investees.  Targeted  equity  investment
                                                         compliance  system  thus  serves  to  protect  both  the
           management  in  accordance  with  the  guidelines  (early
                                                         company  as  well  as  every  individual  employee,  while
           warning indicators and ongoing monitoring and reporting)
                                                         making a contribution to safeguarding the business value
           is used to mitigate the risk. If impairment testing results in
                                                         in the long term.
           the  need  for  write-downs,  impairment  losses  are
           recognised accordingly.

           Interest  rate  and  currency  risks  are  mitigated  using  an
           adequate internal control system for all financial products   In  accordance  with  Sec. 82  AktG  (Austrian  Stock
           used.                                         Corporations  Act),  it  is  the  responsibility  of  the  Board  of
                                                         Directors  to  install  an  adequate  internal  control  and  risk
           The  risk  of  counterparty  default  is  reduced  by  written   management  system  relating  to  the  financial  reporting
           regulations for Treasury. Transactions with counterparties   process.  KELAG’s  Board  of  Directors  has  accordingly
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