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102-15
Key risk categories identified for the TAURON Group
Trading
Risk description | Risk trend | Response to risk |
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Risk related to the change in market conditions for the operations of the TAURON Group’s subsidiaries, in particular as a result of the tightening of the EU climate policy, growing environmental awareness of the society, activities supporting energy efficiency (moving away from coal as fuel, increase in the number of prosumers, support for thermal insulation and construction of in-house energy and heat sources) resulting in a decrease of the margin in the Generation Line of Business (CDS / volume) as well as an increase in costs and a decrease in revenues. | ↑ |
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Finance and credit
Risk description | Risk trend | Response to risk |
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Risk related to an unfavorable impact of interest rates on the TAURON Group’s financial results. | → |
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Risk description | Risk trend | Response to risk |
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Risk related to an unfavorable impact of FX rates on the TAURON Group’s financial results. | → |
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Risk description | Risk trend | Response to risk |
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Risk related to the lack of the TAURON Group’s ability of to pay its liabilities on an ongoing basis | → |
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Risk description | Risk trend | Response to risk |
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Risk related to the difficulties with accessing capital, change to the conditions for obtaining and servicing financing contracted and planned (including due to the tightening of the EU climate policy). | ↑ |
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Risk description | Risk trend | Response to risk |
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Risk related to incorrect or untimely payment of tax obligations. | → |
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Risk description | Risk trend | Response to risk |
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Risk related to a potential occurrence of overdue accounts payable or a conclusion of a contract with a counterparty (business partner, contractor) that may turn out to be insolvent. | → |
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Environment (stakeholders)
Risk description | Risk trend | Response to risk |
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Risk related to the current and future impact on the company’s revenue and capital (equity) due to the negative public opinion backlash, including the risk related to not following the market trends related to the climate protection. | → |
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Risk description | Risk trend | Response to risk |
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Risk related to the lack of the possibility to conduct operations as a result of a prolonged process of obtaining a license or amending the licenses held, as well as the unfavorable legal changes with respect to the licensed operations. | → |
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Risk description | Risk trend | Response to risk |
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Risk related to the changes in the economic situation of the country, instability of the financial markets resulting in a decrease of the demand for electricity. | ↑ |
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Risk description | Risk trend | Response to risk |
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Risk related to the tightening of the EU climate policy, as well as the environmental requirements resulting from the climate change, activities supporting energy efficiency (prosumer development, support for the thermal insulation of buildings, construction of in-house energy and heat sources, departure from coal as fuel), change in the conditions of the TAURON Group’s operation (the need to adapt the company to the challenges resulting from climate change). The implications of the risk are: difficulties or increase in the cost of raising capital to finance operations based on the fossil fuels, the need to incur additional expenditures as a result of the climate change (transition of the assets), difficulty or increase in the insurance costs of the assets based on the fossil fuels, an increase in the costs of the environmental fees and the need to incur additional capital expenditures for adapting the assets to the environmental requirements, an increase of the price of the CO2 emission allowances, decreasing margins in the conventional energy segment, falling demand for electricity as a result of energy efficiency and the prosumer energy development, declining demand for the products offered by the TAURON Group’s subsidiaries, limiting or discontinuing of the operations based on the fossil fuels and carbonates, the need to restructure employment due to a change in the profile of the operations, greater difficulties in all the administrative procedures with the participation of the public by the non-governmental organizations (NGOs), a decline in the value of the enterprise, the inability to meet market expectations due to the lack of the expected products in the portfolio. | ↑ |
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Technology, infrastructure and safety
Risk description | Risk trend | Response to risk |
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Risk related to the impact of the business operations conducted on the natural environment and the use of its resources, including, in particular, the loss of control over the process that would enable the prevention of excessive pollution, damage, disruption or failures of the installations or equipment that would have a negative impact on the environment. The risk also related to the possibility of: lack of the validity of environmental decisions, depositing waste in places not intended for such purpose or not in accordance with the conditions of the use of the facilities intended for such a purpose, the occurrence of a crisis situation: e.g. fire, displacement of earth masses, extreme phenomena, the use of the waste not in accordance with the authorized destination, the lack of the appropriate safeguards limiting the negative impact of the TAURON Group’s operations on the environment, release of the hazardous substances into the environment, social protests.
The implications of the risk are: degradation of the natural environment and penalties for a failure to comply with environmental requirements, the need to remove such substances, the curtailment of the production, delays in the implementation of the investment projects, pollution of water sources in a way that would prevent their use, destruction of a habitat, object or valuable natural area – environmental compensation, restrictions on a further expansion of the business operations, a loss of the image of the TAURON Group, limitation of the ability to use the financial assistance programs. The risk also includes an increase in the environmental requirements due to the tightening of the EU’s climate policy. |
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Risk description | Risk trend | Response to risk |
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Risk related to the more frequent occurrence of the temperatures oscillating around 0°C in winter, milder winters in general, higher rainfall intensity that can cause floods at any time of the year, uneven precipitation, resulting in longer periods of no rainfall, intermittent abrupt rainfall (torrential rains), and the intensification of the evaporation processes, increased frequency and intensity of the hurricanes, strong winds incidentally accompanied by tornadoes and lightnings, more frequent occurrence of droughts and restrictions in access to water related thereto, an increased risk of fires, a very high risk of weakening of the stands, making trees more susceptible to damage caused by winds.
The implications of the risk include, in particular: increased costs of fixing of the failures, decrease of the volume of electricity and heat supply, decline of the production volume, deterioration of the quality indicators and an impact on the regulated revenue. |
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Risk description | Risk trend | Response to risk |
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Risk related to the machinery and equipment failures, distribution grid failures (electricity, heat) caused, among others, by random events including those related to the extreme weather conditions (storms, floods, hurricane winds, heat waves, fires) as a consequence of, among others, the climate change. | → |
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Risk description | Risk trend | Response to risk |
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Risks related to the IT infrastructure security, failures of the IT infrastructure. | → |
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Risk description | Risk trend | Response to risk |
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Risk related to compromising the integrity of machines / devices and to the security of information, including its improper processing and unauthorized disclosure. | → |
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Risk description | Risk trend | Response to risk |
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Impact of geological factors on mining operations. | → |
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Employees and organizational culture
Risk description | Risk trend | Response to risk |
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Risk related to collective disputes, strikes, social conflicts being the consequence of a lack of the personnel’s satisfaction with the economic and social situation. | → |
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Risk description | Risk trend | Response to risk |
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Risk related to the employee issues, including diversity, participation, employment and working conditions, relations with the trade unions and respect for the right to freedom of association, human capital management, career path and recruitment management, training systems, health and safety at work as well as, in the long run, the need to restructure employment due to the climate change, forcing a change in the profile of the business operations. The materialization of the risk may result in interruptions or disruptions to the operations, employee complaints, collective disputes, strikes, loss of specialized staff and difficulties in recreating it. | → |
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Risk description | Risk trend | Response to risk |
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Risk related to non-compliance with the procedures and the lack of the employees’ due diligence in the performance of the official duties. | → |
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Risk description | Risk trend | Response to risk |
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Risk related to ensuring health and safety at work. The materialization of the risk results in employee injury, loss of health or excessive exposure of the employee to factors harmful to health, compensation paid for damage to health. | → |
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Risk description | Risk trend | Response to risk |
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Risk related to providing inaccurate, untrue information or a lack of information disclosure at specific time. | → |
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Compliance
Risk description | Risk trend | Response to risk |
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Risk related to the appropriation or use of the Company’s assets, its devastation, theft, the use of the official position for personal gain resulting in the financial losses, criminal and administrative sanctions, criminal and civil law liability. | → |
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Risk description | Risk trend | Response to risk |
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Risk related to the occurrence of an external fraud (abuse) that affects the operations of the TAURON Group through: disclosure of information to unauthorized persons, loss of information, commercial espionage, terrorist attack and hacker attacks, tax fraud, theft, vandalism, counterfeiting, money laundering, terrorist attack. | → |
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Risk description | Risk trend | Response to risk |
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Risk related to the occurrence of unethical behavior resulting, in particular, in the lack of cooperation, bad atmosphere in the team, mobbing, harassment, insulting, discrimination of employees. | → |
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Risk description | Risk trend | Response to risk |
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Risk related to the non-compliance with the legal regulations, wrong interpretation of the new laws and regulations, requirements imposed by the regulator and the supervisory authorities. The materialization of the risk may result in the financial penalties, criminal and civil law liability, loss of the good image of the TAURON Group. | → |
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Risk description | Risk trend | Response to risk |
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Risk related to a breach of the contractual provisions with respect to the contract parameters or a failure to perform the contract (default). | → |
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Risk description | Risk trend | Response to risk |
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Inappropriate storage and processing of personal data resulting in an undesirable leak or violation of the rights of data subjects related to personal data protection | → |
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Customers and contractors (counterparties)
Risk description | Risk trend | Response to risk |
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Risk related to non-compliance with the customer service standards leading to dissatisfaction with the service, complaints and loss of customers. | → |
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Risk description | Risk trend | Response to risk |
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Risk related to the improper performance by the contractors and subcontractors of the works commissioned, the termination of the agreement and delays, changes to the budget and scope related thereto. | → |
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Risk description | Risk trend | Response to risk |
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Risk related to the decline in the volume of the sales of the products offered by the TAURON Group’s subsidiaries, in particular as a result of the development of the energy efficiency solutions, building insulation, a greater number of prosumers, the impact of climate factors causing a significant temperature deviation from the planned values. The implications of the risk include, above all, the loss of revenue in the individual operating segments of the TAURON Group due to the reduced demand for products offered by the TAURON Group. | → |
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Opis ryzyka | Trend ryzyka | Reakcja na ryzyko |
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Risk related to the procurement proceedings conducted, their erroneous implementation, unplanned increase in the purchase costs, taking into account methods employed to prevent violation of human rights by business partners, counteract corruption and abuse in the purchasing process and compliance with the ethical and moral standards during its implementation. The consequences of the materialization of the risk include unfavorable purchase agreements, the need to cancel the tender procedures, damage to the image of the TAURON Group and credibility with the stakeholders. | → |
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Risk description | Risk trend | Response to risk |
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Risk related to the change of the existing or the introduction of the new regulations that affect the operations of the TAURON Group and the need to adapt to the regulatory changes, in particular those resulting from a significant increase in the requirements of a specific regulation, including the environmental requirements stemming from the climate change, the support for the pro-climate activities (increase in the number of prosumers, thermal insulation, development of in-house production sources). The implications of the risk are primarily: the loss of revenues in the individual operating segments of the TAURON Group, the increase in the operating expenses as a result of the need to adapt to the legislative changes. | ↑ |
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