Risk Management Strategy in MERO ČR, a. s.

The Risk Management Strategy determines the basic orientation of the company striving for a maximum level of protection of the employees’ safety and health, of the environment, property and revenues of the company and of third parties.

With respect to risk management, the objective of MERO ČR, a. s. is to minimize all possible impacts of the risks resulting from the company’s activities on economic results while maintaining the company’s business potential.

1. Purpose

People, property, credit, customer satisfaction and ability to generate profit are the key assets of MERO ČR, a. s. and their keeping and protection are the bases for an ongoing growth and long-term perspective of the company.

Risk management is a decision-making process comprising risk identification and assessment (probability and extent of possible damage) and implementation of cost-effective measures aimed at handling the risks in a way that eliminates or reduces occurrences of potential damage.

Principles of risk management are determined by the approach to risk management in MERO ČR, a. s. while specific procedures are described in detail in separate policies and expressed in strategic objectives in the individual areas:

• strategic risks
• financial risks
• operating risks
• technological risks
• risks related to external factors
• safety risks
• IT risks

2. Objectives, Principles and Basic Tasks

MERO ČR, a. s. protects its tangible and intangible assets against any loss or damage, which:

• may have a negative impact on the ability to fulfill the company’s obligations in respect to its owners, business partners, customers, employees and the society – the operating environment of the company (city, district, country, general public, the environment);
• may cause, directly or indirectly, damage to health, property or the environment in respect to any of the entities located on the premises of the corporation and its environs.

To attain the objective, MERO ČR, a. s. is based on the following principles:

2.1 Comprehensive risk management system as a system of company internal management, helping to:

• eliminate occurrence of emergency situations, to minimize the probability thereof and to minimize impacts of these situation on activities of the corporation;
• optimize the cost of prevention and damage coverage in a long-term perspective;
• actively manage (influence) the risk portfolio.

2.2 Identification and preventive influencing of the risks generated by the operating environment of MERO ČR, a. s.:

• risk identification and assessment, preparation and selection of the most suitable preventive and repressive measures;
• introduction, implementation and use of the measures necessary to prevent, reduce and manage risks and evaluation of the efficiency thereof.

2.3 Application of risk management procedures in individual areas of activity and in comprehensive processes (such as funding, planning):

• integration of the appropriate risk management procedures and approaches into all managing, controlling and executive structures of the company;
• procedures for early detection of increased risk (high-risk conditions) and signs of emergency situations;
• procedures for emergency situations handling;
• providing funds which would counterbalance impacts of damage while maintaining, in a long-term perspective, the lowest possible level of the costs of risk management and risk coverage (financial and material coverage) by insurance and risk transfer.

2.4 Active involvement of the employees, their training and education:

• the corporation MERO ČR, a. s. involves each employee in asset protection by detecting and affecting any existing and predictable risks which may harm the company’s assets;
• the employees, teams and individual units of the corporation look for answers to the following questions:
  • What can happen?
  • How to prevent it (loss, damage), how to support positive effects?
  • What should be done in case of a negative situation to minimize its impacts?
• in training programs, employees are informed about and trained in the measures and procedures required to handle potential risks and providing for identification, monitoring, control and updating of the implemented risk management system according to changing circumstances.

2.5 Creation of organizational prerequisites for risk management in MERO ČR, a.s.:

• plans, conceptual and updated tasks following strategic objectives and changes in the organization or in the system.

3. Risk Management Organization

3.1 The company management is the main decision-making body which, based on the global risk management strategy approved by the company Board of Directors, ensures the following:

• approving strategies for management of the selected key risks;
• deciding on tolerable levels of risk for the selected key risks.

3.2 Risk owner (head of the unit in which the risk occurs) is responsible for executive management of the risk and for compliance with the defined rules.

3.3 Risk Manager is responsible for elaboration of draft strategies for the selected risks, for supervision over the implemented risk management system and for monitoring and evaluation of the risks. He suggests reviews of and changes in the risk management strategies. He cooperates with risk owners to draft proposals of tools and limits for individual risks management.

4. Final Provisions

4.1 Risk Management is one of the binding documents of MERO ČR, a. s.