'КАЗАХСТАНСКАЯ КОМПАНИЯ ПО УПРАВЛЕНИЮ
ЭЛЕКТРИЧЕСКИМИ СЕТЯМИ' (KAZAKHSTAN
ELECTRICITY GRID OPERATING COMPANY) 'KEGOC' JOINT
STOCK COMPANY
APPROVED
by Minutes of KEGOC Board of Directors
No. 9 dated 29 December 2010
Amended by Minutes of Meeting of
KEGOC Board of Directors
No. 6 dated 04 July 2014
COMPANY STANDARD
KEGOC POLICY ON CORPORATE
RISKS MANAGEMENT
СТ KEGOC 00-202-10
Copy No. ___
Version 2
Effective date ___________
Astana
СТ KEGOC 00-202-10
Version 2
Table of Contents
1 Scope of Application
2 Regulatory References
3 Terms and Definitions
4 Designations and Abbreviations
5 Responsibility and Authority
6 General Provisions
7 Goals, Tasks and Principles of Risk Management System
8 The Model of Risk Management System
9 Processes of Risk Management System
10 Reporting
11 Policy Management
Appendix 1 Approval Sheet
Appendix 2 Acknowledgement List
Appendix 3 Amendments Record Sheet
Appendix 4 Record of Periodic Checks
This Company Standard may not be fully or partially reproduced, duplicated or
distributed without permission of the Representative of KEGOC IMS Management.
Unauthorized copying of the document is forbidden page 2 out of 13
СТ KEGOC 00-202-10
Version 2
1 Scope of Application
1.1 This Company Standard (hereinafter referred to as the Policy) establishes the
Corporate Risks Management Policy for Kazakhstan Electricity Grid Operating
Company - KEGOC (hereinafter referred to as KEGOC) to regulate processes
and procedures of KEGOC Risk Management System.
1.2 This Policy shall be applied by all structural subdivisions, branches and
employees of KEGOC.
1.3. KEGOC branches and affiliates shall independently elaborate the policy,
procedures and instruments for risks management based on and subject to the
provisions of this Policy.
To ensure the unified approaches to the management of general risks inside the group
of Companies, KEGOC coordinates the activity on development of Risk Management
System in branches and affiliates.
2 Regulatory References
This Policy refers to the following documents:
KEGOC Long-Term Development Strategy until 2025;
СТ KEGOC 00-101-10 Company Standard. Document Management.
Р СУР KEGOC 00-200-14-СД Guidelines. Risk Management System.
3 Terms and Definitions
This Policy uses terms in accordance with KEGOC internal documents as well as the
following terms with respective definitions:
3.1 Risk shall mean any possible event or action that if occurred may affect the
achievement of KEGOC goals and may infringe the successful implementation
of its strategy.
3.2 Risk Owner shall mean an entity (employee/structural subdivision) which job
duties envisage responsibility for all aspects of certain risk management, in
particular for decrease of plausibility of risk occurrence and/or decrease of
possible influence of consequences caused by risk occurrence on KEGOC.
4 Designations and Abbreviations
This Policy uses the following abbreviations:
KEGOC - Kazakhstan Electricity Grid Operating Company (KEGOC);
B&A - Branches and Affiliates;
CDD - Corporate Development Department;
RMS - Risk Management System.
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СТ KEGOC 00-202-10
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Sole Shareholder – Sovereign Wealth Fund ‘Samruk-Kazyna’ JSC.
5 Responsibility and Authority
5.1 This Policy shall be approved by the decision of KEGOC Board of Directors.
5.2 Control over implementation of the requirements indicated in this Policy shall
be performed by the Deputy Chairman of Management Board - Corporate
Governance.
5.3 Responsibility for compliance of the Policy requirements with the requirements
of the legal acts of the Republic of Kazakhstan, regulatory documents shall be
borne on the Head of CDD.
5.4 Responsibility for management of this Policy shall be borne on the Senior
Manager of Risk Management and Internal Control Division, CDD.
5.5 Heads of KEGOC structural subdivisions, including branches and affiliates shall
be responsible for performance of the requirements stated hereof.
6 General Provisions
6.1 This Policy of the Corporate Risks Management was elaborated in accordance
with the legislation of the Republic of Kazakhstan, requirements of the Sole
Shareholder, KEGOC Long-Term Development Strategy until 2025 and
international best practices and risk management standards.
6.2 The Policy is aimed at minimization of adverse effect of the threats which may
influence the achievement of goals and implementation of tasks stated in
KEGOC Long-Term Development Strategy until 2025. Risk management
process in KEGOC has a preventive nature, and shall be carried out in the whole
company and under the control and with the direct participation of the top
management of the company.
6.3 The Policy does not guarantee lack of losses and successful KEGOC’s activity,
it ensures the strategic advantages allowing it to intensify the certainty in
achievement of strategic and operational goals, defines responsibility, ensures
transparency and feasibility of the made decisions, enables to track and timely
respond to the changes and tendencies in the outer environment.
6.4 This Policy defines the directions for development of RMS, regulates the major
processes of this system and maintains the adequate level risk-management
structure.
6.5 Risk management is an essential part of doing business. Each structural
subdivision, KEGOC employee and branches and affiliates when performing
their functions and implementing the assigned tasks shall follow the
requirements stated herein.
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СТ KEGOC 00-202-10
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7 Goal, Tasks and Principles of Risk Management System
7.1 RMS goals:
- The main goal of risk management in KEGOC is to ensure continuous
activity through hedging the influence of inner and outer adverse effects on
KEGOC’s activity.
7.2 RMS tasks:
1)
elaboration and application of uniform and consequent approaches to risk
identification, assessment and management in KEGOC, simplification of a
procedure for risk information sharing vertically (management) and horizontally
(experience exchange).
2)
dynamic response to occurring risk events, tracking changes in inner and outer
environment;
3)
arrangement of goal-directed risk management activity to ensure their decrease
down to the acceptable level or transfer to the third parties (outsourcing,
insurance, hedging) or risk aversion;
4)
systematization and further accumulation of information on risks in KEGOC,
increase of KEGOC manageability;
5)
improvement of KEGOC's competitive strength and achievement of the assigned
strategic goals through RMS intensification.
7.3 Basic RMS Principles:
-
engagement of KEGOC’s executives in risk management process;
-
constant improvement of the risk management system;
-
continuity of learning and knowledge sharing by the company employees
in risk management sphere;
-
transparency and fairness in submitting reports and risk escalation;
8 The Model of Risk Management System
8.1 Organizational Structure of RMS in KEGOC is given in picture 1.
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СТ KEGOC 00-202-10
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Shareholders
Internal Audit Service
Board of Directors
Audit Committee
Management Board
Risk Committee
Structural Subdivision responsible for
risk management
Structural Subdivision 1
Branch 1
Structural Subdivision 2
Branch N
Structural Subdivision 3
Structural Subdivision N
Branches and Affiliates
1
Branches and Affiliates N
Picture 1 - Organizational structure of RMS in KEGOC
8.2 To fix the roles and duties on timely risk identification and management there
has been elaborated a cooperation model built on the concept of three levels of
RMS:
8.2.1. KEGOC Board of Directors and the Internal Audit Service.
The Board of Directors is responsible for the efficient operation and
development of RMS in general.
The Internal Audit Service is responsible for the regular audit of RMS and
submission of the independent opinion to KEGOC Board of Directors/Audit
Committee.
8.2.2. KEGOC Management Board and structural subdivisions.
The Management Board is obliged to prepare, maintain and use the procedure
on risk identification, assessment and management, to organize the efficient
operation of RMS, to support the structural subdivisions when introducing the
risk management processes in their activity. Members of the Management
Board shall use the information on risks when making the managerial
solutions.
Structural subdivisions are the risk owners and shall bear the responsibility for
timely risks identification, analysis, assessment, management, preparation of
proposals for key risks mitigation and KEGOC key risks report.
8.2.3. Risk Committee and structural subdivision responsible for risk management.
The roles of the Risk Committee are to preliminary review and prepare the
recommendations for KEGOC Management Board to make decisions on risk
management.
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СТ KEGOC 00-202-10
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Structural subdivision responsible for risk management is obliged to develop
RMS, clarify the internal and external requirements, render the consultant
support for the structural subdivisions with regard to the risk management
issues. Also the structural subdivision responsible for risk management
together with the Internal Audit Service for successful implementation of the
Policy on Corporate Risk Management can hold regular checks in order to
identify the level of efficiency of the measures on risk mitigation.
9 Processes of Risk Management System
9.1. RMS consists of the following components and processes:
- Internal environment. Internal environment determines the nature of the
organization and provides for the preparation of the documents specifying the
policy and minimum requirements with respect to the risks, corporate culture
improvement, ethical values enhancement, understanding of risk-management,
behaviour, processes and practices at all levels of the organization as an
integral part of day-to-day operations.
- Determination of goals. Potential risks identification process shall be in line
with the Company's goals. Corporate risk management makes it possible to
ensure that the organization has a process of goals and tasks setting, which are
in line with its mission and correspond to its risk appetite.
- Risk identification. This process determines the internal and external events
which can influence the Company's goals achievement.
- Risks assessment. Risks are analysed in terms of probability of occurrence and
influence as a basis to decide on their management. Risks are assessed on
qualitative and quantitative basis.
- Risk management. This process determines the methods to response to the
risks (to avoid, hold, control or postpone) and provides for preparation of the
action plan which is in line with the tolerance level of the organization to the
risks.
- Control. It is a set of policies and procedures which provide for the risk
management system functioning.
- Information and communication. It means the required information to be
submitted by the structural subdivisions to KEGOC for compilation of a
risk management report.
- Monitoring. This process tracks the risk management system integrity on a
regular basis, and to be amended if required. Monitoring is performed on a
regular basis or based on a sample assessment.
9.2. Detailed description, structure and procedures of RMS are given in the
Guidelines for Risk Management System.
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СТ KEGOC 00-202-10
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10 Reporting
10.1. The Company provides for a permanent information interchange throughout the
RMS levels in order to increase the awareness level with regard to the risks, to
develop the risk - culture and to manage the risk efficiently. Risk reports provide
every level of the management with a certain volume of timely information
according to the approved form.
10.2. KEGOC has the following reporting system on risk management:
- every quarter before the 12th day of the month following the reporting one, the
structural subdivisions - risk owners shall submit the risk reports to the
structural subdivision responsible for the risk management in accordance with
РСУР KEGOC 00-200-14-СД Guidelines. Risk Management System;
- structural subdivisions/branches and affiliates (risk owners) shall submit the
information on the occurred risks to the structural subdivision responsible for
risk management, within five (5) business days from the day of risk occurrence
(and within five (5) business days from the day of conclusion of investigation)
in the form of the Report on the occurred risk;
- based on the information submitted by the structural subdivisions - risks
owners, the structural subdivision responsible for risk management shall
prepare and submit every quarter the risk report to the Risk Committee,
Management Board, Board of Directors in accordance with РСУР KEGOC 00200-14-СД Guidelines. Risk Management System.
At year-end IAS prepares the Report on the RMS efficiency to the Board of
Directors.
11 Policy Management
11.1 The Policy shall be managed in accordance with СТ KEGOC 00-101-10.
11.2 The Policy shall be approved by the Chairman of the Management Board Corporate Governance, KEGOC’s IMS Rules, Managing Director - Legal
Support and Security, Head of Legal Department, Head of Internal Audit
Service, Head of Corporate Development Department, by making a record in the
Approval Sheet.
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СТ KEGOC 00-202-10
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Prepared by:
__________________
(signature) (date)
Zh. Zhumabayeva,
Senior Manager for Corporate Development and
Risk Management Division - CDD
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СТ KEGOC 00-202-10
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Appendix 1
to the Company Standard
Policy on Corporate Risk Management
Ф.СТ KEGOC 00-101-01
Approval Sheet
Position
First Vice President
Name
Date
Signature
S. Ospanov
Vice President - Corporate Zh. Beksary
Governance
Vice President - Operations
B. Kazhiyev
Managing Director for System
Services and Material and
Technical Supply
V. Lee
Managing Director – Legal
Support and Security
K. Zhakipbayev
Managing Director –
Economics
A. Botabekov
Managing Director for NPG
Development, Advisor for
Corporate Development
V. Osochenko
Managing Director – Branches
and Affiliates
A. Akmurzin
Head of Legal Department
M. Auezova
Head of Corporate
Development Department
Ye. Akhmetov
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СТ KEGOC 00-202-10
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Appendix 2
to the Company Standard
Policy on Corporate Risk Management
Ф.СТ KEGOC 00-101-02
Acknowledgement List
Position
Name
Date
Signature
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СТ KEGOC 00-202-10
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Appendix 3
to the Company Standard
Policy on Corporate Risk Management
Ф.СТ KEGOC 00-101-03
Amendments Record Sheet
No. of
Sheet No.
statement
being the
basis for
amend replac
introducin
new
ed
ed
g
amendme
nt
1
2
3
4
Name of
person
introducin
cancelle
g
d
amendme
nts
5
6
Signatur
e
of a
person
who
made
amendm
ents
Date
of
amendm
ents
7
8
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Appendix 4
to the Company Standard
Policy on Corporate Risk Management
Ф.СТ KEGOC 00-101-04
Record of Periodic Checks
Date
of
check
Name of person
who performed
checks
Signature of a
person
who performed
checks
Comments
1
2
3
4
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