Main Risk Factors and Mitigating Measures
The Group is exposed to a variety of macroeconomic (foreign exchange rates, crude oil prices), financial (capital structure, liquidity, cash flow, and credit), regulatory and market risks (refining margins, EU Emissions Trading System, energy prices), as well as operational risks. The geopolitical tensions in Eastern Europe and the Middle East, coupled with global economic uncertainties and ongoing adjustments in international trade, contribute to an environment of increased risk and volatility. In this evolving environment, the existence of a strong risk management framework is crucial, ensuring business continuity and maintaining competitiveness. To address these risks, the Group has implemented comprehensive risk management policies that align with international best practices and take into account local market conditions and regulatory requirements. The primary objective of these policies is to minimize the Group’s exposure to market volatility and mitigate any adverse impacts on its financial position to the greatest extent possible.
The following section outlines the key risks faced by the Group and the corresponding measures implemented to mitigate them.
Main risks |
Indicative mitigating measures |
| Macroeconomic environment | |
|---|---|
Crude oil and products market:
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Global Economy:
|
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Energy transition:
|
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Foreign exchange risk:
|
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Greek economy:
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|
Main risks |
Indicative mitigating measures |
| Financial risks | |
|---|---|
| Capital structure |
|
| Liquidity |
|
| Credit |
|
| Operational risks | |
|---|---|
| Safety & Environment |
|
| Ensuring refineries’ supply with raw materials |
|
| Reduced operation or unplanned shut-down of a refinery |
|
| Compliance in terms of operation and product quality |
|
| Property and liability risk |
|
Overview of Internal Control System and Risk Management
In the same context, the Internal Control System and Risk Management of the Group incorporate safeguards and monitoring mechanisms at various levels within the organization, as outlined below:
Identification, Assessment, Measurement and Management of Risks
The identification and assessment of risks predominantly transpire during the strategic planning and yearly formulation of the business plan. The scrutiny of advantages and opportunities duly considers the Company's activities, along with the impacts on various stakeholders.
Planning and Monitoring / Budget
The Group’s performance is monitored through a detailed budget per operating sector and market. The budget is consistently adjusted, and Management oversees the Group’s financial performance through regularly issued reports and comparisons between the budget and the actual results.
Adequacy of the Internal Control System
The Internal Control System consists of the policies, procedures and tasks which have been designed and implemented by the managing risks, achieving business objectives, ensuring the reliability of financial and administrative information, and complying Management for the purpose of effectively with laws and regulations. Through periodic assessments, the Independent Internal Audit Department ensures that the identification procedures and risk management employed by Management are adequate, that the Internal Control System functions effectively and that the information provided to the Board of Directors regarding the Internal Control System is reliable and of high quality.
Roles and Responsibilities of the BoD
The role and responsibilities of the BoD are outlined in the Company’s Internal Regulations Manual, which is approved by the BoD.
Prevention and Suppression of Financial Fraud
Areas identified as high risk for financial fraud are subject to stringent monitoring through the implementation of appropriate internal controls and enhanced security measures. In addition to the internal controls implemented by each department, all Company activities are subject to audits conducted by the Internal Audit Department. The results of these audits are subsequently presented to the BoD.
Internal Operating Regulation
The Company has compiled an Internal Operating Regulation (IOR), which has been approved by the BoD. The IOR establishes powers and responsibilities that facilitate the proper segregation of duties within the Company.
The Group’s Code of Conduct
In line with the fundamental obligation of sound corporate governance, the Company has drafted and adopted the Code of Conduct, which has been approved by the BoD. The Code of Conduct summarizes the principles that should guide the actions of any individual, whether an employee or a third party involved in the Group's operations, as well as any collective body, in the performance of their duties. Therefore, the Code serves as a practical guide for the daily tasks of all Group employees and third parties who collaborate with the Group.
The Group's Code of Conduct was revised in 2024, drawing on the experience of its implementation over the past decade and to align with recent legislative developments.
Safeguards in Information Technology (IT) systems
The IT & Digital Transformation Department of the Group is tasked with formulating the IT strategy and providing training for employees to address any emerging needs. Additionally, it is responsible for supporting IT systems and applications by creating and updating operation manuals, in collaboration with external consultants as necessary. The Group has established a comprehensive framework to oversee and regulate its IT systems, consisting of internal controls, policies, and procedures.
Safeguards for Financial Statements and Financial Reporting
The Group implements standardized policies and monitoring procedures within the accounting departments of its subsidiaries. These policies encompass various aspects, including definitions, accounting principles adopted by the Company and its subsidiaries, and guidelines for the preparation of financial statements and consolidation. Moreover, it employs automated checks and validations across different transactional and reporting systems. In instances involving non-recurring transactions, explicit approval is mandatory.
Chart of Authorities
The Group has implemented a Chart of Authorities, which outlines the delegated powers granted to different executives within the Company. This enables them to execute specific transactions or actions, such as payments, receipts, contracts and so forth.
Risk Management in 2024
Global GDP grew by 2.7% in 2024, while economic growth in Greece came in at 2.3%, despite the uncertain international economic environment. With regards to the global oil demand, it increased by 1.6 mbpd in 2024, reaching 103.8 mbpd.
The Company continues to implement its strategic plan with a focus on a pragmatic energy transition and strengthening its business model, thereby enhancing the risk management framework.
