Redeia has a Comprehensive risk management system in place in order to facilitate the fulfilment of the company’s strategies and objectives, ensuring that the risks that could have an impact on them are identified, analysed, evaluated, managed and controlled in a systematic manner, with uniform criteria and within the level of acceptable risk approved by the Board of Directors.
Accordingly, Redeia periodically conducts sensitivity analysis to monitor the potential evolution of key variables that could impact achievement of the Strategic Plan, including financial risks such as interest rates, inflation and non-financial risks as operational factors.
The management System conforms to the ISO 31000 standard regarding risk management principles and guidelines and is ongoing and comprehensive in nature, consolidating risk management by business unit, subsidiary, and support areas within the corporate scope.
Risk management and control: Organisational structure and responsabilities
Redeia has a Comprehensive Risk Management Policy and a general Procedure for comprehensive risk management and control, based on the COSO ERM Enterprise Risk Management-Integrated Framework for Corporate Risk Management.
Comprehensive Risk Management Policy
The Board of Directors is responsible for approving the Comprehensive Risk Management Policy, as well as for awareness and periodic monitoring of internal control, prevention, and reporting systems. Twice a year, the Board reviews the risk control system and relevant risks, without prejudice to the information regularly received from the Audit Committee as part of its ongoing monitoring.
Redeia's Risk Management System also specifically analyses risks considered as emerging, which are either new risks whose origin differs from traditionally managed risks or existing risks that may undergo significant changes in the medium or long term due to their scope or considerable changes in the consequences they generate. These risks are considered to potentially impact the organisation, which given their nature, they are difficult to predict, estimate and assess and their time horizon is uncertain.
The main difference between emerging risks and other risks within the organisation lies in the process of identification, evaluation, and measurement of these risks due to their inherent nature. The impacts of emerging risks are difficult to estimate and quantify, so there is no measurement process in terms of probability and impact. Additionally, the time horizon for emerging risks extends beyond that used for measuring traditional risks or beyond the time horizon of the current strategic plan.
Risks associated with climate change
Climate change risks comprise both physical risks associated with modifications in climate parameters (which can directly affect the facilities or impact the services rendered by Redeia) and transition risks (related to changes stemming from the fight against climate change, including regulatory, technological, market, and reputational).
To enhance the management of risks associated with climate change, in 2018, Redeia started working on implementation of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Since then, key actions have been taken to develop and improve this implementation, such as revising the governance model, developing a specific methodology for identification, prioritisation, and economic quantification, considering different scenarios and time horizons, reviewing methodologies, and expanding the analysis to businesses in Latin America and telecommunications.