Risk Management

The activities of OAO "IDGC of Urals" are affected by a range of factors that are beyond the Company's control. Many of the risk factors described below are of macroeconomic character and typical for any company. Certain business segments are subjects to certain risk factors.

Risks in commercial services on energy transmission, to certain extent, derive from risks in wholesale and retail energy markets. These developing markets, in their turn, are more risky than developed markets (dealing with other products and services) and include significant legal, economic and political risks. Political risks have a small contribution to overall risks. Dynamic development of wholesale and retail energy markets enable us to suppose that the given information can quickly become outdated. The current information uncertainty, caused by the dynamism of the factors, can influence the Company's future activities, possibility for asset sale and observance of maturity dates. Besides, several risks which are not currently significant can become economically viable in future.

Risk management in OAO "IDGC of Urals" is carried out on a systematic ongoing basis. The Company is always active in detecting events having potentially bad influence on any aspect of its activity, in evaluation and control of would-be negative consequences or opportunities of such consequences, in implementation of effective measures on risk minimization or liquidation as well as correcting the results of the chosen strategy. The goal of the risk management system is to achieve the Company's aims and decrease the possibility of potential losses, to provide its long-term stable operations and observe the balance of interest of all interested parties.

With a view to prevent potential risks, OAO "IDGC of Urals" regularly monitors social economic and normative legal environment, projects international economic environment and elaborates possible future scenarios, strategic plans and executes control over operations. Decisions on risk management taken by our top managers are in compliance with the current Russian legislation and provide good balance between positive effect from decisions and expenses caused by implementing them. Implementing decisions on risk management we constantly analyze their practical effectiveness.

Main risk management methods used by OAO "IDGC of Urals" include:

- Insurance for property, industrial objects and transport, civil liability, medical insurance, etc.;

- Diversity in retail market with a view to allocate consumers in total volume of services;

- Rejection to work with unreliable contractors;

- Diversity in purchase of materials, equipment, services to reduce the Company's dependence on certain contractors;

- Rejection to promote investment projects with a potentially high risk level.

Federal and Regional Risks

Industry Risks

Financial Risks

Legal Risks

Last update: 10.03.2010