Corporate Risk Management System

The Company has the Regulations on the Risk Management System in placeIn pursuance of Paragraph 2 of List of Instructions from the President of the Russian Federation Based on the Results of the Meeting on the Issue of Raising Efficiency of Companies Partially or Fully owned by the State No. Pr-3013 dated 27 December 2014 and Executive Order of the Government of the Russian Federation No. 3984p-P13 dated 24 June 2015 (Letter of the Federal Agency for State Property Management (Rosimushchestvo) No. 11/27343 dated 7 July 2015). Approved by the resolution of the Board of Directors of Transneft dated 16 November 2015 (Minutes No. 28)., developed in accordance with the Methodological Instructions for Preparation of Regulations on Risk Management Systems issued by the Ministry of Economic Development of the Russian Federation. The following documents were referred to for the purpose of the development of the Regulations on the Risk Management System:

  • GOST R ISO 31000-2010. Risk management. Principles and guidelines;
  • GOST R 51897-2011. ISO guide 73:2009: Risk management. Terms and definitions;
  • Russian versions of the applicable international ISO standards.

The Regulations on the Risk Management System set the general principles for building the Risk Management System (hereinafter referred to as the RMS), its goals and objectives, general approaches to setting it up, as well as to distribution of functions and responsibility between the RMS subjects and the nature of their interaction.

Based on the general requirements to setting up the RMS contained in the Regulations on the Risk Management System, the Company developed the Risk Management Rules of ProcedureApproved by the resolution of the Management Board of Transneft on 01 April 2016 (Minutes No. 13)., defining the procedures of interaction between business units within the RMS. In addition to that, the key RMS parametersApproved by resolution of the Board of Directors of Transneft on 24 December 2018 (Minutes No. 20). were adopted, including the preferred and admissible risk levels, as well as risk assessment scales and the matrix for classifying risks as critical.

For general coordination of the Risk Management System, the Management Board of Transneft approved ОR-03.100.00-KTN-058-16 the Regulations on the Risk Management Council of Transneft (Minutes No. 13 dated 01 April 2016) and created the Risk Management Council, whose composition was approved by the resolution of the Management Board of Transneft dated 12 May 2016 (Minutes No. 21).

In 2019, the updated Regulations on the Risk Management Council of Transneft OR-03.100.00-KTN-261-19 and the updated composition of the Risk Management Council were approved (resolution of the Management Board of Transneft dated 19 September 2019, Minutes No. 32):

  • Nikolay Tokarev (President of Transneft and Chairman of the Risk Management Council);
  • Maksim Grishanin (First Vice President of Transneft);
  • Larisa Kalanda (Vice President of Transneft);
  • Pavel Revel-Muroz (Vice President of Transneft);
  • Vyacheslav Skvortsov (Vice President of Transneft);
  • Rashid Sharipov (Vice President of Transneft).

The RMS ensures that Transneft’s strategic goals and the main objectives of the LDP are reached. Special emphasis is placed on:

  • ensuring that Transneft’s and its subsidiaries’ operations are safe and uninterrupted, as well as meeting the Company’s contractual obligations in respect to crude oil and petroleum products transportation in full;
  • keeping the Company’s property intact and unlocking the potential of Transneft and its subsidiaries;
  • increasing the resilience of Transneft and its subsidiaries in the fast changing external and internal environment;
  • ensuring resources and opportunities are used rationally and efficiently.

The Risk Assessment Section under the Directorate of Financial Support and Risk Assessment of the Department of Economy of Transneft is the business unit ensuring the RMS functions at Transneft. The main objectives and functions of the given business unit include:

  • coordinating risk management processes, including risk management process monitoring;
  • developing and amending essential methodological and regulatory risk management documents;
  • developing RMS parameters;
  • training the Company’s personnel to work with the RMS;
  • supporting risk identification procedures carried out by the Company’s business units, including through use of the results of monitoring procedures conducted by the internal audit unit;
  • compiling and updating the Company’s risk registers, as well as approving access thereto for the Company’s business units;
  • gathering information and preparing materials on RMS matters, including all types of risk reporting;
  • providing advisory and methodological support of risk assessment and analysis processes jointly with the Company’s business units;
  • participating in quantitative estimation of critical risks.

In 2020-2021, it is planned to improve the RMS considering the implementation of GOST R ISO 31000-2019: Risk management. Principles and guidelines and GOST R ISO 58771-2019: Risk management. Risk Assessment Technologies.

Key Principles and Objectives of the RMS
Objectives Principles
  • forming a methodological basis for functioning of the RMS;
  • distributing powers and responsibility for risk management at all corporate management levels;
  • identifying, analysing and assessing risks;
  • developing and implementing risk management measures;
  • monitoring risk statuses and managing risks;
  • reporting on risk management.
  • ensuring uniformity and integration of risk management approaches and standards across the Company’s corporate governance system;
  • ensuring comprehensive and continuous risk management in all lines of the Company’s business and across all business processes;
  • ensuring the essential and sufficient effort to manage risks and keep the risk level within the acceptable limits while providing for the most efficient implementation of the Company’s goals and objectives;
  • providing RMS subjects with the authority and resources (including information) that are essential and sufficient for managing risks;
  • ensuring timeliness of impact upon the risk, mainly through preventive procedures and measures, as well as availability of action plans, should any risk materialise;
  • prioritising essential and sufficient measures for managing critical risks;
  • regulating risk management processes in accordance with the distribution of functional obligations of RMS subjects;
  • providing for RMS’s adaptivity to changes and constant improvement.
Interaction between the Subjects of the Transneft Risk Management System