Risk management

Landsnet is committed to meeting its legal obligations in a manner ensuring that the safety and security of its employees, customers and equipment are assured, its financial position is solid and that it performs its core functions in the best possible harmony with the environment and society at large.

The objective of our risk management is twofold: to increase the probability of a successful outcome and to reduce, first, the probability of shocks and, second, uncertainty about the achievement of goals.

A major factor informing our approach to risk is the fact that Landsnet provides an essential service to society. Accordingly, the company’s risk appetite and risk tolerance are low.

Risk assessment

A risk assessment of Landsnet’s activities is carried out annually. This work is led by a special Risk Committee. Our risk assessment went through extensive improvements during the year. It identifies the risks that may occur in our activities, examines the potential impacts of these risks on our operations and sets out mitigating strategies to minimise or prevent the impacts of these risks.

The types of risk covered by the assessment include operational risk, counterparty risk and financial risk.

  • Operational risk is defined as the risk of negative impact on Landsnet’s performance. This includes aspects relating to generation fed into the grid, the grid itself, information and surveillance systems, management, the legal environment, contracts, etc.
  • Counterparty risk is the risk of a counterparty to a financial or other commercial agreement failing to meet its obligations thereunder.
  • Financial risk primarily concerns financial aspects of the company’s activities, i.e. the risk of financial loss on both on- and off-balance-sheet items, including as a result of changes in the market price of such items. This includes changes in interest rates, exchange rates and inflation. Landsnet’s defined financial risk consists of market risk, liquidity risk, exchange rate risk and inflation risk.