Risk Management Framework

Over the years, market conditions have become more volatile and complex and are changing at an ever-accelerating pace. In such an environment, our long-term success depends on how early we are able to identify the risks and respond to them. To safeguard the Company against the rising risks, JSW Energy has set up a robust risk management structure that enables regular and active checking of business activities for identification, evaluation and mitigation of potential internal or external risks.

Through better risk management, we aim to continue creating value for all our stakeholders, while being resilient to the varied risks. We strongly believe that a major step towards strategic risk management is strict adherence to regulations and standards. We have also established processes and guidelines, along with a strong overview and monitoring system at the Board and senior management levels. We have laid down procedures to inform Board members about the risk assessment and risk minimisation measures.

As an organisation, we encourage strong ethical values and high levels of integrity in all our activities, which by itself, considerably mitigates risks. Different segments of the organisation are vested with specific responsibilities to identify, assess and mitigate risks.

How We Oversee Risk

		Responsibility	Function	Key Activities
Board	Apex Body	Strategy, Performance and Risk Management	Business Units, Countries and Support Units	Oversee Risk Strategy
Senior Management	Centre	Policy and Monitoring	Corporate Oversight and Control Functions	Mitigation and Contingency Planning
		Risk Management Committee Facilitate Discussions and Conception of Solution Status Monitoring
Departmental Heads	Risk Owners	Independent Assurance	Department Audit	Risk Identification

Our robust risk management framework assists us in identifying risks proactively and managing them through:

• Timely identification, communication and assessment of risks and opportunities
• Risk ownership aimed at comprehensive coverage, impact assessment, proactive action and regular tracking
• Training of all risk owners with a view to embedding risk intelligence in:

• Decision-making – To ensure prudence
• Performance – To ensure competence and accountability

• Timely escalation to the Directors’ Committee for risk oversight to ensure prioritisation of initiatives and allocation of resources in line with enterprise objectives
• Independent review through risk-based audit

We recognise that the emerging and identified risks need to be managed and mitigated to create sustainable value for all our stakeholders and achieve business objectives.

The key risks identified by the Company and the strategies adopted to mitigate them, along with the capitals being affected by them, are summarised below:

Key Risks	Material Issues	Mitigation Plan	Capital Linkage
Market Fluctuations	Changes in fuel prices and availability	Offset the uncertainty via diversification of fuel and purchase/sale agreements
	Demand Fluctuations	Higher or lower growth in annual demand has a moderate short-term impact on the Company’s results, given the characteristics of the generation facilities and the structure of the long-term PPAs
	Changes in price of electricity	Major portion of our energy generation is being sold through secured long-term PPAs at: i) Regulated tariff ii) Fixed price
Financial Risks	Foreign exchange fluctuations	Prudent hedging strategies to mitigate the risk of foreign exchange fluctuations
	Changes in interest rate	Continuous change in financing mix through refinancing and appropriate fixed rate instruments such as Non-convertible Debentures (NCDs)
Regulatory Risks	Environmental norms	Comply to environmental norms, occupational health & safety regulations, energy and quality management systems Adopt energy-efficient and cleaner technologies Promote environmental stewardship
	Electricity Authority Regulations	Comply with technical and safety standards requirements Regulatory provisions
Operational Risks	Multi-location manufacturing facilities	Deploy necessary investments Apply essential quality systems Plan and monitor day-to-day functioning Train staff Obtain appropriate casualty and civil liability insurance
	Occupational Health and Safety (OHS)	Focus on Total Quality Management (TQM) Regular safety trainings for both permanent and contractual employees Medical facilities and health insurance benefits
Social Risks	Stakeholder grievances	Regular stakeholder engagement Engagement with local communities through Corporate Social Responsibility initiatives Implementation of grievance redressal system