Management Board Report on the activity of the JSW S.A. for 2012
4.1. Risk factors and threats
Jastrzębska Spółka Węglowa S.A. 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 JSW S.A. and the Group.
In 2012, Jastrzębska Spółka Węglowa S.A. took a number of steps to modify and develop the existing Corporate Risk Management System in the Company. 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 the Company and the specific nature of its operations as a mining enterprise. 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 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 Company'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 Risk Management Officer, 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 Officer 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.
Risks have been presented below where if they ever occur they may exert a material and adverse impact on the Company’s operations, its results and financial position, causing a decline in value and share price. Additional risk factors which are unknown at present or which are currently believed to be immaterial may also exert a material and adverse impact on the Company’s operations, its financial position and operating results.
The following risk factors are among the risk factors to which the Company is exposed and to which special attention is drawn:
