Risk management and internal control system

The risk management and internal control system of Gazprom is an aggregate of interrelated organizational measures and processes, organizational structure, local regulations of Gazprom and Gazprom Group entities, and other documents, methodologies and procedures (rules and regulations, standards and guidelines), as well as norms of corporate culture and actions undertaken by the employees of the structural units of Gazprom and Gazprom Group entities, aiming to provide sufficient guarantees concerning the attainment of goals and objectives and to support the employees of the structural units of Gazprom and Gazprom Group entities during decision-making under uncertainty.

The principal goals, objectives, concepts and approaches regarding the risk management and internal control system are outlined in the Policy on the risk management and internal control system of Gazprom approved by the decision of the Gazprom Board of Directors No. 3195 dated December 25, 2018.

The risk management and internal control system has the following goals:

• to provide reasonable confidence that the goals of Gazprom and Gazprom Group entities will be achieved; and
• to exert proper oversight over the financial and business activities of Gazprom and Gazprom Group entities.

The principal objectives of the risk management and internal control system are as follows:

• to support the systematic and continuous processes that identify and assess risks affecting the attainment of the goals of Gazprom and Gazprom Group entities;
• to ensure effective risk management and streamline decision-making processes related to risk response; to raise the efficiency of resource utilization and allocation with regard to risk management activities and internal control procedures;
• to improve the local regulations of Gazprom and Gazprom Group entities with regard to the integration and/or streamlining of risk management processes and internal control procedures at every level of management;
• to create a robust information environment for activity planning and managerial decision-making; to provide information on decision-related risks for managerial decision-making processes;
• to increase sustainability and operational effectiveness of the financial and business activities of Gazprom and Gazprom Group entities; and
• to ensure compliance with the law and the local regulations of Gazprom and Gazprom Group entities.

The basic operating principles of the risk management and internal control system are: coherence (integration), materiality and resourcing, continuity of functioning, separation of duties, uniformity of the regulatory environment, and cost effectiveness.

Advice Line for queries on risk management and internal control

With a view to improving the efficiency of the risk management and internal control system in the business processes of the Gazprom Group subsidiaries and entities, an Advice Line for queries on risk management and internal control was established.

The Advice Line works to coordinate the activities of and provide advice to the Gazprom Group subsidiaries and entities in the matters pertaining to the implementation, development and streamlining of the risk management and internal control system in the course of:

• changes in business processes (automation, introduction of internal organizational changes, scale-up of business, legislative changes);
• adoption of new operations within financial & business and production activities;
• risk identification and assessment;
• development of action plans for: risk response; elimination of deficiencies in the internal control system; prevention of risk recurrence.