For Celsia, Risk Management is decisive in the fulfillment of its Strategy and is reflected in the daily work of our employees.
GRI (3-3) Risk management is a differentiating, essential factor to achieve business sustainability. In addition, it is a priority principle for our employees and an aspect that allows us to plan events that may significantly affect our Mission, prepare the mitigation of their impacts in order to reduce the perception of uncertainty related to decision making and safely ensure the achievement of our goals. Likewise, at Celsia, we identify opportunities to promote them and manage them correctly.
GRI (3-3) At Celsia, we manage risks under the guidelines of the Comprehensive Risk-Management System (CRMS) Policy and the Manual. Our methodology includes the permanent identification, measurement, treatment and monitoring of the risks to which we are exposed, and its purpose is to quickly and proactively evaluate those impacts, both favorable and unfavorable, that may affect the achievement of Strategic Objectives and the business performance. Additionally, we have a technological tool that is managed by each of the teams and that supports us in the management and monitoring of risks and opportunities in each of our processes
The Risk-Management Tool allows us to integrate risks in one place with their level of exposure, causes, controls, responsible parties and action plans, among others.
The CRMS focuses on identifying the most-relevant risks in the Strategy to address the incidence and criticality of the impacts on our objectives in:
Evaluation of the Magnitude and Potential Scope of Risks
TCFD: risk Management – a The Risk-Management Process at Celsia is defined in the CRMS and aligned with good international practices, such as the ISO 31000 Standard and the COSO Enterprise Risk-Management (ERM) Standard, which define similar components, based on an understanding of the business, objectives, environment and trends.
Subsequently, the relevant risks are identified and analyzed, the mitigation controls are associated, the risk is evaluated, its treatment is defined, and they are recorded and reported. We apply this same process to manage risks and opportunities derived from climate change. Our risk of climate change and scarcity of resources is strategic for the Company and is assessed qualitatively and quantitatively, from the physical impacts to our assets caused by climate threats to the implications associated with the transition, such as changes in the market, technology and the regulation.
We have Mitigation, Compensation, Adaptation, Communication and Treatment Plans defined and focused on Business-Continuity Strategies, risk transfer through the insurance program and taking advantage of opportunities, such as the diversification of the energy matrix with unconventional renewable sources, energy efficiency and sustainable mobility, among others.
This work methodology covers the risk of climate change; additionally, some specific issues are presented to the Sustainability Committee.
Structural Independence in the Risk-Management Function
GRI (2-13) Risk Management is transversal to the Organization and external to the Business Lines: Asset Management, Homes and Companies (managed from the Generation, Transmission and Distribution; and Marketing Areas).
The Financial Leader maintains constant interaction with Senior Management and the Board of Directors’ Audit, Finance and Risk Committee, bodies that have the greatest responsibility for risk management in the Company.
In addition, our CRMS is supported by the Risk Management Policy, which establishes the elements and the general framework for action against risks of all kinds, which the Organization faces, as well as the Governance Structure, which indicates the instances, roles and responsibilities to manage and ensure the proper functioning of the CRMS.
Risk-Management Training for Non-Executive Directors in 2022
The Company promotes the training of the members of the Board of Directors on issues related to the Business and Risk Management. During 2022, knowledge was provided in cybernetic risk and in the current trends on which the new strategic risks were based, such as world news and the country’s political-economic variables.
Additionally, they were sensitized to environmental, social and governance (ESG) risks and the quantification of the climate-variability risk.
The Risk Module also continued to be used in the application of the Board and the Steering Committee. This tool provides access to updated information on strategic risks, a risk map and its characterization, as well as the initiatives that are being executed as mitigation measures.
In order to strengthening the culture of risk management, we have online training for all employees of the organization:
Likewise, we carried out testing exercises of our Business Continuity Plan and Crisis Management, for the cyber-crisis reporting year.
With our principal businesses, we carry out Operational-Risk Workshops and implement a more-intuitive application for Risk and Opportunity Management.
We have the permanent accompaniment of risk specialists to share trends and best practices.
Strategic and Emerging Risks
This is how we advance in interdisciplinary work to identify and assess Strategic and Emerging Risks:
Extreme Climatic Events
In recent years there has been an increase in the frequency and severity of climatic events, such as floods, droughts, landslides and cyclones, affecting the continuity of the Company’s operations.
Possible Commercial Impact
Decrease in income due to loss of generation capacity, due to drought, in hydraulic plants and possible material damage to equipment, which prevents the operation of the plants.
- Maintain financial mechanisms to cover the risk of commercial default.
- Continue with the Insurance Program with material damage and loss of profit coverage.
- Strengthen our Business Continuity Plans and Disaster Risk Management.
Scarcity of natural resources to produce solar panels and wind turbines
The manufacture of solar panels and wind turbines requires rare metals, such as neodymium (used in wind turbine magnets) or germanium (used as a conductor in solar panels); they are limited resources, and their demand continues to grow.
Possible Commercial Impact
- Cost overruns in the construction of unconventional renewable energy sources (FNCER) projects.
- Failure to comply with the Company’s regulatory commitments in the entry of wind and solar projects.
- Study alternative low-emission technologies (hydrogen, batteries, biofuels, etc.).
- Evaluate possibilities to use and reuse the materials used in the manufacture of these pieces.
- Support research projects on new substitute minerals.
Principal Results in 2022
GRI (3-3) During 2022, we identified global trends with an influence on our businesses and we created value based on them: