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Risks and Opportunities
Both financial and non-financial risks, such as climate crisis, changing sector dynamics, egulations, public policies and tariffs and retaining talents in human resources affect the electricity distribution sector. We map these risks in order to manage them by identifying the level of influence. This structure has three phases: defining, evaluating and categorizing the risks. With this system, we ensure transparency and influence decision-making processes with regular reporting.
All risks and opportunities are identified through a detailed assessment process. For each risk and opportunity, best, base and worst cases are simulated with their probability of occurrences. Correlations are considered during consolidation of risk and opportunity impacts. For the risks that are not easy to quantify, impact and occurrence levels are defined based on alternative approaches and prioritized accordingly. These assessments form the basis of the Enerjisa Risks and Opportunities reporting, which is presented to top management as well as to the Enerjisa Early Risk Detection Committee.
- The Enerjisa Board delegates the monitoring of risks to the Early Risk Detection Committee. Members to the committee are selected board members as well as the Enerjisa CFO. Aside from receiving regular Risks and Opportunities reports, each meeting agenda includes an in-depth review of a prioritized topic. The Early Risk Detection Committee is chaired by an independent board member and reports directly to the Enerjisa Board. You can reach the Working Principles of the Early Risk Detection Committee from here.
Based on their sources, we classify risks and opportunities into five main categories: egulatory risks and opportunities, market risks and opportunities, credit risks and opportunities, liquidity risks and operational risks. For each risk and opportunity, best and worst cases are simulated with their probability. The risks that cannot be expressed in numerical terms, but can cause negative outcomes in the Company’s strategic and operational activities are regarded as qualitative risks. These risks are monitored and prioritized according to their potential impact levels and recorded with risk-reducing practices. Quantifiable risks that have financial impact are reported after sensitivity analysis.