Corporate Risk Management

The analysis of corporate risks of Tractebel Energia consists of identifying and classifying such risks as to the likelihood of occurrence, materiality in terms of financial and image impact, and degree of control

GRIG4-2 | G4-14 | G4-45 | G4-46

The corporate risk and opportunity analysis consists of a company-wide systematic process, part of all our activities, which involves employees, managers and officers, including our CEO, in addition to our Risk Management Committee. The role of this Committee is to analyze risks and opportunities by proposing goals and guidelines for the management of this.

The results of this process are registered in the Corporate Risk and Opportunity Matrix, a document that steers how we conduct business. The analysis of corporate risks consists of identifying and classifying such risks as to the likelihood of occurrence, materiality in terms of financial and image impact, and degree of control.

The Matrix Assessment is conducted at least once a year, taking into account the short-, medium- and long-term corporate risks. Based on this assessment, we develop action plans for each risk and identify possible associated opportunities. GRIG4-47

Accordingly, the risk analysis goes beyond complying with the controlling shareholder’s or market requirements, and makes up an efficient strategic planning tool. Several corporate objectives, followed up over time, originate from the action plans resulting from this analysis. After being approved by the Executive Committee, these objectives generate targets for the managerial staff to tie their variable compensation to the achievement of such targets. The identified risks and opportunities are characterized by possible changes as compared to Medium-term Financial Planning (PMT). Negative changes compared to the PMT translate into risks and positive changes translate into opportunities.

The main risks assessed are:

Market risk | the supply and demand of electric energy can behave differently over time, with an impact on the energy volumes and prices.
Regulatory risk | adverse evolution of electricity industry regulation.
Tax risk | adverse evolution of tax laws and tax authorities’ actions
Economic factors risk | change in the economic variables, such as interest, foreign exchange, commodity prices, economic growth, and inflation, with an impact on the Company’s business
Breach of contract risk | non-compliance with the energy purchase and sale contracts that we have entered into and the selling rules of the Electric Energy Trading Chamber (CCEE).
Social and environmental risk of the plants in operation | adverse evolution of environmental regulation and actions from organized social movements regarding the plants in operation.
New project development and building risk | occurrence of events during the development and building of projects that generate delays to the construction calendar or additional plant building or operation costs.
Energy unavailability risk | the output of Company-owned plants and purchased energy being insufficient to cover the guaranteed output.
Human resources risks | unavailability of labor due to failure to hire and train personnel on a time basis to meet our expansion and replace former employees; cost increases due to competition for human resources due to economic growth; and work-related accidents.
Information technology risk | unavailability or deficient security of information technology resources could have an adverse impact on our operations and image.
Risk of large accident | major accidents and disasters due to natural or human causes, involving project building, plant operation, and Company management.

As for climate change, we have identified opportunities for the development of new projects for our activities. Thus, we are investing in conventional and unconventional renewable sources and, in order to build up a strategic reserve for situations of unexpected shortage of rainfall that also includes non-renewable sources. GRIG4-EC2

Tractebel Energia 

        addresses 11 themes 

as the key risks to be assessed, including the market risk

The risk analysis goes beyond complying with the controlling shareholder’s or market requirements, and makes up an efficient strategic planning tool