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Management of key risks

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A detailed description of risks inherent to the Corporation and its organisations’ activities and main approaches to manage these risks is provided in the reports of the Corporation for 2011–2012. The main results from the management of the key risks that produced the most serious impact in 2013 are given below.

Risks and risk management results in 2013

In 2013, the approved risk preparedness measures were observed by both the quantitative (financial) indicators and by the groups with zero preparedness for a breach.

Table. Risks and risk management results


growth, or

no substantial changes
Risks and their dynamicsRisk management results

Financial risks

Currency risk
The Currency Risk Strategy and the Currency Risk Hedging Programme were approved. The programme’s implementation helped to decrease the risk of losses due to unfavourable fluctuations in currency exchange rates.

Interest risk
As interest rates grew in the reporting year, risk was decreased by drawing five-year maturity loans at fixed interest rates that led to an increase in the mid-term credit portfolio. As a result, the interest on profit and loss levelled out over the maturity periods.

Credit risk

Risk growth was due to increased activity by the Central Bank to revoke the licenses of problematic banks, the untimely discharge of obligations towards JSC Rosenergoatom Concern in the electricity and power market (failure to pay for consumed electricity), and a drop in economic growth rates in Russia.

To minimise the risk:

  • limits were set for agency banks;
  • guarantees were used and advance payments benefiting external counterparties were limited;
  • a regular monitoring of accounts receivable of the sectoral enterprises was carried out while accounts receivable committees operated in the Corporation and its organisations; and
  • the credit risk with regard to buyers and customers under contract for the delivery of products or services, which assumed payment delays, was assessed and measures were implemented to manage the credit risk depending on its assessment level.

Liquidity risk

The risk reduction was due to the fact that in the reporting year, the rating agency Moody’s Investors Service gave JSC Atomenergoprom a long-term international rating of Baa2, with a stable outlook, and a national rating of

Also, in the reporting year, the rating agency Fitch Ratings gave JSC Atomenergoprom a long-term international rating of BBB, with a stable outlook, and a long-term national rating of AAA(rus).

Moreover, in October 2013, the international rating agency S&P affirmed JSC Atomenergoprom’s credit rating at the sovereign level of ВВВ/А-2, with a stable outlook.

For details, see the Report section “Financial capital management”.

Commodity risks

Risks associated with the market of nuclear fuel cycle products and services

Risk growth was due to the stagnation of demand and a downward trend of prices in the NFC product and service markets, caused mainly by the delays in restarting NPPs in Japan, nuclear power abandonment, or share reduction policies in a number of European countries (primarily Germany, Switzerland, and Belgium), as well as competitive pressure from shale gas on nuclear generation in the U.S., the growing competition of NFC market participants, and the large unsold inventories of producers and traders of uranium products. Over 2013, spot natural uranium prices dropped by 21% and long-term ones dropped by 11%; spot price quotations of enrichment services decreased by 17%, and long-term ones decreased by 15%.

To ensure risk reduction:

  • agreements were reached with suppliers regarding pricing mechanisms that “mirror” the pricing of contracts with a high level of commodity risk;
  • volumes to be contracted were discussed early on with buyers and future volumes of buyers’ contracts were assessed based on the history of interaction with them and the market situation. Alternative options of replacement/additional contracting were considered; and
  • quantitative flexibilities and options, which help harmonise purchase and sale volumes, were stipulated in contracts with suppliers of U3O8, conversion services, and SWU.

In fact, in 2013, in spite of the continued stagnation of demand for, and processing of, the NFC product and its service markets, the Corporation managed to maintain the volume of its foreign portfolio of orders for NFC products and services for a 10-year period at last year’s level.

See the Report section “International business”, as well as the reports by JSC Techsnabexport, JSC TVEL, and JSC ARMZ for 2013.

Electricity market risks

Risk growth is due to the slowing down of Russia’s economic growth and expectations of a drop in electricity consumption that could in turn negatively affect the electricity market price.

The possibility of managing this risk is limited. It is fairly difficult to use financial derivatives as one of the possible management instruments due to the low liquidity of trading platforms.

In 2013, the growth of day-ahead prices of electricity sold by JSC Rosenergoatom Concern was 12.5%. This was caused, to a great extent, by a natural gas price increase in Russia from 2012.

Operational risks

Risk of decreasing electricity generation

In 2013, a project to restore the lifetime performance of a graphite stack was implemented at Unit 1 of the Leningrad NPP; the minimum balance of the FST (the minimum amount of electricity JSC Rosenergoatom Concern should produce over the year) was met at 101.6%. In fact, 172.22 billion kWh of electricity was generated.

For details, see the Report section “Power Generation Division” and the JSC Rosenergoatom Concern’s report for 2013.

Industrial safety and ecology risks

In 2013, the sectoral enterprises operated safely (there were no operational events from the nuclear facilities that posed any danger to the public or the environment).

For details, see the Report sections “Nuclear and radiation safety” and “Management of natural capital, environmental safety, and environmental protection”, as well as the environmental reports of the Corporation’s organisations.

Investment risks

In 2013, the projects that were implemented using the Corporation’s own funds were optimised to increase the total return of the portfolio by 1.5%.

For details, see the Report sections “International business”, “Capital projects and engineering”, and “Financial capital management”.

Political risks

The main risk factors that hindered the establishment and broadening of international cooperation were the political instability in a number of regions around the world, the post-Fukushima syndrome that still persists in some countries, unfair competition on the part of some players in the international market, “stove-piping” that took place in the foreign mass media to discredit the Corporation’s activities and the technologies it uses, and attempts to place national legislation over international law.

In 2013, all key overseas projects of the Corporation were implemented or continued as planned. Also, the conclusion of 11 intergovernmental agreements and 7 interagency arrangements in the fields of peaceful uses of atomic energy, nuclear safety, and research and development in nuclear and energy areas, etc., was a positive sign of the renewal of interest in nuclear power development in foreign states.

For details, see the Report sections “International cooperation” and “International business”.

Reputation risks

Risk growth was due to:

  • negative outlooks regarding the economic development of Russia that entailed a reduction of budget support to Russian municipalities and subjects that host nuclear industry facilities;
  • stably negative dynamics of global uranium processing, which made the current mining of natural uranium by the shaft method at JSC PIMCU unprofitable along with a number of other mining projects featuring a high cost of extraction in Russia and abroad; because of this, the Corporation had to implement programmes for the improvement of mining operational efficiency, including staff number optimisation at JSC PIMCU; and
  • a background factor was the persistent instability of activities to eliminate the consequences of the accident at the Fukushima-Daiichi NPP (continued leaks of radioactive water).

To achieve risk reduction, work was done to build up positive attitudes among the public regarding the development of nuclear technologies through information transparency and open interaction with all stakeholders.

In 2013, according to a poll conducted by Levada-Centre, in Russia the average percentage of supporters of nuclear power development remained at the preceding year’s level of 51.3%.

For details, see the Report section “Management of social and reputational capital”.

Risk of asset loss and damage

The Corporation employed a consistent sectoral system to prevent corruption and protect assets.

In 2013, the prevention and audit measures to protect assets brought about an effect worth RUB 5.1 billion.

For details, see the Report Section “Corruption and Other Law Offences Countering System”.

Compliance risks

In 2013, an audit of the compliance function of the Corporation was conducted. As a result, compliance risks were identified and prioritised, and their owners were designated. The roadmap for the compliance function development in the Corporation was approved.

For details, see the Report section “Internal control system”.

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