Risk Taxonomy

The EDPR closely monitors and reports risks of a strategic and ESG nature, since it believes that, if they materialise, they could have a significant impact, mainly in the medium and long term. Strategic & ESG risks can be broken down into two distinct natures: 

• Strategic
• ESG 

Business risks include all the risk factors intrinsically linked to the remuneration of the EDPR's core business in the various geographies and markets where it operates. Energy Business risks can be broken down into two distinct types: 

• Energy markets
• Regulation 

Financial risks include market risk factors complementary to those of the EDPR's energy business (non-operational) in the various geographies and markets where it operates. Financial risks can be broken down into three different types: 

• Financial markets
• Asset rotation
• Liquidity

Counterparty risk is related to unexpected changes in the ability to fulfil obligations on the part of customers, as well as energy counterparties, financial counterparties (essentially associated with deposits with financial institutions, financial derivatives, and insurance) and suppliers. Additionally, it also includes “Integrity” to ensure an overarching structure of counterparty risk analysis. Counterparty risks can be broken down into two different types: 

• Credit and operational
• Integrity

Operational risks aggregate the risk factors complementary to those of the EDPR's energy and financial business in the various geographies and markets where it operates, associated with the planning, construction and operation of physical assets, execution of processes, systems, and legal and compliance. legal systems and litigation and compliance. Operational risks can be broken down into four different types: 

• Physical assets
• Execution of processes
• Systems
• Legal & Compliance