Risk factors and threats

The Capital Group in exposed to various risks in every area of its activity. Actions taken in the main area of activity, on account of the highly risky and volatile mining and geological conditions (underground conditions for mining deposits), entail extensive risk. The changing legal regulations concerning the mining of deposits and environmental protection, tax regulations and their interpretation constitute a risk of additional financial requirements being implemented on the Parent Company and the Group.

In 2012, the Parent Company took a number of steps to modify and develop the existing Corporate Risk Management System. As a result of the this work, proposals for comprehensive risk management solutions were developed, based on the practice of COSO, FERMA and ISO systems, while taking into account the high requirements of JSW S.A. and the specific nature of its operations. As a result of this work, the Corporate Risk Management Policy and Procedures were approved by the JSW S.A. Management Board in December 2012 and implemented and adopted for use in January 2013. These documents are a comprehensive description of a formal corporate risk management system that meets the highest risk management standards.

The purpose of this system is to:

- identify the potential events that may have an adverse effect on the Parent Company,
- keep risk within the specified limits, and
- ensure the achievement of business objectives in a reasonable manner
 

Risk management is a continuous process. The Group's quickly changing economic environment forces it to revise and update the list of risks continuously.

In 2012, the Management Board established, within the organizational structures of JSW S.A., the position of a Representative for Risk Management, fully dedicated to the coordination of tasks related to the Corporate Risk Management System. Within the scope of his tasks, acting together with risk owners, the Representative manages risks acting on the basis of the mentioned procedures and policy. Among others, he analyzes the existing risk-mitigating control mechanisms, the rules for measuring exposures to respective risks and develops recommendations for the current risk response plans.