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Risk Management

During 2010 as well, operating management of commodity and/or currency risk, was implemented in a hedging capacity, aimed at establishing the margins provided by the budget of the commercial transactions effected in both the Gas and Electricity Areas by Hera Trading and Hera Comm.

From the organisational viewpoint, the activity is centralised in one sole function (risk management), allocated in the Gas Division, in relation to the coverage requirements for fuel and exchange, for carrying out both the coverage activities of that area and those of the Energy Division.


This approach, based on the creation of a concentrated fuel concentration portfolio on the one hand and a concentration/electricity trading portfolio on the other, without generating a duplication of competences, enables the unitary management of homogeneous risks of the two companies and, based on macrohedging instead of using specific hedging formulas, has made it possible to attain certain advantages, such as:

  • Achievement of greater levels of hedging;
  • Elimination of constraints on the minimum volumes which can be hedged;
  • Optimisation of costs for lesser recourse to the market, by netting the positions of single contracts and the positions generated by the Gas and Electricity Areas;
  • Increased flexibility in evaluating procurement contracts with non-standard index-linked formulas;
  • Increased flexibility in structuring the products and services, with the possibility of proposing/quoting index-linked formulas different to those present in the acquisition portfolios;
  • Increased visibility of the over-the-counter (OTC) commodities prices.

The activity carried out in the Concentrated Risk Portfolio, based on derivative financial instruments even if carried out for hedging purposes only does not meet the requirements of IAS 39 for application of hedge accounting. Consequently, the result attained and the anticipated value of the derivatives in the portfolio are included in the operating result of the Gas Area.

The credit risk represents Hera Tradings exposure to potential losses from failure to fulfil the obligations assumed by the counterparties, particularly in relation with the growing commercial activity involving the sale of gas and electricity.

Starting from January 2010, the Credit Control and Management Policy became effective in order to control this risk as well which, in combination with the economic crisis, has assumed great significance.

This Policy was defined by Hera Spas Risk Control Department and was approved by the Energy Risks Committee on 1 December 2009.