Annual Report 2019

Sustainability risk management

Risk management is one of the key areas of the Company’s focus. Metalloinvest is constantly improving its risk management methods in various fields.

Sustainability risks are associated mainly with environmental and social goals, which are considered separately due to their specific nature.

The Company’s risk management procedures are carried out by each business or functional unit, while the Risk Management Department of the Management Company acts as the main methodologist and is responsible for development and streamlining of risk identification, assessment and monitoring procedures. The risks identified at the function and business unit levels are assessed, ranked and documented in a single register of risks. Additional attention is paid to the risks identified as key risks. They are managed and monitored at the level of the Board of Directors.

The Board of Directors performs regular reviews of risk management issues, discusses plans to improve the risk management system, carefully studies all the reports regarding the exposure to new risks, and analyses key risks. In 2020, the Board of Directors is planning to adopt new risk management strategy, which, inter alia, envisages active work in fostering sustainable development practices in the Company.

  • Top risks relevant to the Company’s sustainable development:
  • Non-managed risk factors
  • Managed risk factors

Given the changing nature of the environmental legislation, the Group has a risk of non-compliance with its requirements.

  • Main risk factors:
  • Tightening of requirements of environmental laws and regulations;
  • Changes in law enforcement;
  • Depreciation of production assets;
  • Non-compliance of some production facilities with environmental requirements.
  • Main response strategies:
  • — Development and implementation of the environmental programme of the Group; — External audit of compliance of corporate environmental management system and integrated management system with the requirements of ISO 14001: 2015; — Conducting industry benchmarking on greenhouse gas emissions using the benchmarking system of WSA and Russian Steel Association to introduce best practices to minimise the carbon footprint of products; — Integration of the best available technologies in construction and modernisation of production facility; — Constant participation of the Company’s representatives in professional organisations and communities (Russian Union of Industrialists and Entrepreneurs and others); — Interaction with state authorities regarding regulatory activities.

These risks involve occupational injuries and diseases. The Group has a zero tolerance for such risks.

  • Main risk factors:
  • Insufficient quality of equipment;
  • Traffic accidents on external roads;
  • Unfavourable natural conditions, emergency situations;
  • Hazardous production facilities;
  • Violation of labour discipline and labour protection requirements by employees;
  • Human factor;
  • Operation of faulty equipment and insufficient control of the condition of existing equipment.
  • Main response strategies:
  • — Strict requirements for injury reporting both at work and at home; — Audit of the industrial safety system; — Ensuring compliance with the recommendations of the international system of management and labour protection OHSAS 18001: 2007; — Increased OHS expenses; — Modernisation of personal protective equipment; — Implementation of an occupational disease reduction programme; — Introduction of an innovative approach in the OHS management system: audits of behaviour, integration of the internal coaching system, implementation of an automated inspection system.

The group is exposed to the risks of key employee outflow, lack of motivation and the risk of a long-time search for employees with necessary skills and competencies.

  • Main risk factors:
  • Shortage of qualified personnel in the labour market;
  • Low motivation of employees;
  • Slow adaptation of employees to changes.
  • Main response strategies:
  • — Development of the Corporate University; — Development of a system for attracting young employees and creation of a talent pool; — Development of a financial and non-financial incentive system and a social support system.

Risks of employees’ abuse, internal fraud, corruption. The Group does not accept any case of corruption or other intentional illegal acts.

  • Main risk factors:
  • Bribes offered to employees in the interests of third parties;
  • Inflation, decrease in the purchasing power of the population in the regions of the Group’s operation;
  • Criminal intentions of employees;
  • Inappropriate performance of duties by employees;
  • Disadvantages of the control environment;
  • Conflicts of interest.
  • Main response strategies:
  • — Informing and training employees on ethics and anti-corruption issues; — Hotline for misconduct reporting; — Identification and investigation of incidents, accountability for offenses; — Professional development of employees involved in the implementation of measures to prevent and combat corruption.


In 2020, Metalloinvest will continue to work intensively on developing its risk management system. The Company will focus on building an effective risk appetite process and risk culture. It is planned to hold a series of special workshops for various employee groups to help them gain an in-depth understanding of risk management issues.

It is assumed that this would become an indispensable part of the framework to promote a risk-aware culture. In December 2019, a training seminar on risk management was organised for the Company’s senior managers.

In 2020, we intend to hold a similar training seminar for our staff responsible for investment management. We are looking at possibility to run such training events for production workers.

Activities involving revision of existing and development of new internal regulations are another milestone in improving the Company’s risk management system. It should be noted that many plans are focused on reaching the medium- and long-term targets, so after 2020 the Company will go further with their implementation.