
The most important risks and their potential impact on the TAURON Group’s value drivers
The Company actively manages all risks, striving to eliminate or reduce their potential negative impact, in particular on the Group’s financial result.
[G4-2] The most important risks and their potential impact on the TAURON Group’s value drivers are presented below.
Finances and credit
1. Market risk
Risk associated with unfavorable impact of interest rates and exchange rates on the TAURON Group’s financial result.
Risk trend: ↘

Risk response (selected elements):
- Ongoing monitoring of the exposure to the aforementioned risk to minimize the adverse consequences of changes in market conditions.
- Transfer of risk with derivatives.
2. Liquidity / financial risk
Risk associated with the method of financing operations, following from the capital structure in the business.
Risk trend: ➔

Risk response (selected elements):
- Diversification of funding sources using guaranteed funding programs and ensuring alternative financing sources.
- Execution of the central financing policy.
- Analysis of the market and availability of the sources of financing.
- Monitoring the schedules and dates of announcement of the financing program.
3. Credit risk
Risk associated with the possibility of overdue receivables or conclusion of a contract with a counterparty that becomes insolvent.
Risk trend: ➔

Risk response (selected elements):
- Regular monitoring of the counterparty’s financial standing.
- Regular client scoring, credit assessment of each client before submission of an offer/conclusion of a contract.
- Use of security instruments in trade agreements.
Sales
4. Market and commercial risk
Risk associated with unfavorable change of prices in the energy and related product markets exerting an adverse impact on the Group’s financial result.
Risk trend: ↗

Risk response (selected elements):
- Monitoring and update of the security strategy.
- Ongoing monitoring of the exposure to the aforementioned risk to minimize the adverse consequences of changes in market conditions.
- Limiting commercial positions in risk mandates.
Employees and organizational culture
5. Employee risk
Risk associated with breaching provisions of law, rules, procedures and internal regulations prevailing in the TAURON Group. This risk also comprises employee errors or a lack of diligence and the possibility of collective disputes and employee claims and loss of specialized staff.
Risk trend: ➔

Risk response (selected elements):
- Actions to develop a model strengthening employee motivation.
- Development of competences through employee training.
- Application of prevailing instructions and internal regulations.
Clients and counterparties
6. Customer service risk
Risk associated with failure to comply with the customer service standards.
Risk trend: ↘

Risk response (selected elements):
- Monitoring and analysis of external client satisfaction and complaint indicators.
- Taking additional actions, e.g. in internal regulations, defining standards of conduct as a result of ratio analysis.
- Development of competences and skills of key account managers.
- Continuous improvement of customer service standards.
7. Risk related to performance of agreements by subcontractors
Risk of subcontractors’ inadequate performance of engagements, withdrawal from an agreement and ensuing delays and changes of budget and scope.
Risk trend: ➔

Risk response (selected elements):
- Conclusion of subcontractor agreements compliant with the TAURON Group’s standards.
- Analysis of contractual performance, analysis of the quality of the services performed by subcontractors.
- Assessment of the financial condition and reliability of subcontractors.
8. Volume risk
Unfavorable changes or termination of trade agreements by clients, leading to lower revenues from operations.
Risk trend: ➔

Risk response (selected elements):
- Conduct of marketing activities, acquisition of new customers.
- Actions focused on retaining existing and recovering lost customers.
- Ongoing update of the offering, launch of multi-bundle products.
Compliance risk
9. Internal fraud risk
Appropriation or temporary use of the Company’s assets, devastation of TAURON Group’s assets, use of an official position to obtain different kinds of personal benefits, e.g. by compelling customers to behave in a specific manner.
Risk trend: ➔

Risk response (selected elements):
- Close compliance with internal procedures to prevent abuse (security procedures, authority reviews).
- Conduct of compliance activities.
- Promotion of best practices, improvement of procedures, training.
- Enforcement and promotion of the TAURON Group’s Code of Business Ethics.
10. External fraud risk
Actions of third parties involving, among others, theft, robbery, actual break-in, computer break-in, information theft, forgery.
Risk trend: ➔

Risk response (selected elements):
- Monitoring of potential and actual security incidents.
- Antivirus protection of workstations.
- Physical security of facilities.
- Security tests.
11. Concession risk
Inability to operate as a result of a protracted process to obtain a concession or changes to the concessions held. Unfavorable legal changes regarding operations requiring a concession.
Risk trend: ➔

Risk response (selected elements):
- Ongoing control of correct performance of concession obligations.
- Monitoring of changes in legal acts from the perspective of concession obligations.
- Legal support in the process of extending a concession.
12. Compliance risk
Risk associated with non-compliance with the laws, incorrect interpretation of new laws and regulations, requirements imposed by different regulators: URE/UOKiK/KNF/GIODO etc.
Risk trend: ➔

Risk response (selected elements):
- Constant monitoring of the legal environment and changes of regulations.
- Update of the internal regulations in accordance with amendments to laws.
- Appointment of task forces to prepare and implement the required changes in internal regulations.
- Constant cooperation with the bodies supervising the energy market and the capital market.
- Employee training on the changes introduced.
Environment
13. Reputation risk
Up-to-date and future impact on the company’s revenues and capital stemming from the public’s negative perception.
Risk trend: ➔

Risk response (selected elements):
- Constant monitoring of internal and external threats to the Company.
- Media monitoring, building contacts and relations with the media in the TAURON Group.
- Preparation of procedures for the Company’s communication with the internal and external environment.
14. Competition risk
Unfavorable impact of competitors’ activities on TAURON Group’s customers and financial performance.
Risk trend: ↗

Risk response (selected elements):
- Launch of a line of products tailored to customer needs.
- Launch of sales of additional products to loyalize customers.
- Introduction of the possibility of bundling TAURON’s products into multi-offers.
15. Regulatory risk
Unfavorable impact of legislation at the national and EU level, following from the necessity to adapt to new legal regulations and the related costs.
Risk trend: ↗

Risk response (selected elements):
- Constant monitoring of the legal environment and changes of regulations.
- Analysis of the bills of legal acts and planning of the required adaptation actions.
- Implementation of the required changes to internal regulations.
Technology and infrastructure
16. Environmental risk
Potential adverse impact exerted by operations on the natural environment and failure to adapt to and comply with environmental requirements in national and EU law.
Risk trend: ➔

Risk response (selected elements):
- Ongoing supervision over compliance with the conditions of environmental decisions.
- Maintaining the required performance of emission reduction facilities.
- Frequent assessment of compliance of actions with the legal requirements regarding environmental protection.
- Execution of environmental investments to minimize the adverse impact exerted by mining and washing coal.
17. Weather risk
Impact of atmospheric factors on the operation of the business, both from a technological and commercial perspective.
Risk trend: ➔

Risk response (selected elements):
- Modernization of the hydro structures to optimize the use of water resources.
- Preparation of plans for overhauls, reviews and maintenance activities with flexible provisions regarding the work execution timing.
- Constant monitoring of wind conditions and icing of wind turbine blades.
- Constant technical monitoring over the operation of individual wind turbines conducted by the companies operating the wind farms.
- Monitoring and analysis of new technological solutions limiting the impact exerted by unfavorable weather conditions on the volumes of generated electricity.
18. Asset failure risk
Impact exerted by machinery and equipment failures, overhauls, modernization, maintenance and management of the production and non-production assets on attaining the company’s objectives.
Risk trend: ➔

Risk response (selected elements):
- Optimization of capital expenditures for replacement of assets, ongoing monitoring of the condition of machinery, equipment and installations.
- Improvement of the professional qualifications and work culture among employees through training.
- Responding to emergency situations through technical service and security automation.
- Insurance of assets against acts of god (excluding underground assets).
- Introduction of IT tools for improvement of monitoring and failure rate management.
19. IT risk
Risks associated with security and reliability of the IT infrastructure.
Risk trend: ↗

Risk response (selected elements):
- Development and execution of IT infrastructure continuity plans.
- Periodic identification and classification of IT resources based on service recovery objectives.
- Use of IT solutions with appropriate technical parameters, ensuring an acceptable level of reliability and performance (including UPS devices, GSM modems, mobile phones).
- Planning and delivery of training on business continuity and security of IT infrastructure.
- Storage and protection of backup data.
20. Facility and information security risk
Risk associated with breach of integrity of machinery/equipment and security of information, comprising its inappropriate processing and unauthorized disclosure.
Risk trend: ➔

Risk response (selected elements):
- Monitoring of execution of the security plans for facilities subject to mandatory protection.
- Maintenance and update of emergency procedures/plans.
- Supervision over compliance with the prevailing confidential information security rules.
- Regular employee training on prevailing security procedures.
21. Geological risk
Impact exerted by geological factors on mining activity.
Risk trend: ➔

Risk response (selected elements):
- Check boreholes for better understanding of the structure of coal deposits.
- Continuation of preventive actions in areas at risk to improve the geological and mining conditions and protect against natural hazards (including, among others, preemptive explosions to decompress the rock mass).