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Risk Policy

 Our Corporate Liquidity Risk Policy is the backbone for the different policies, standards and procedures we use at Newcom to manage risks. See below the key points of our policy. 

 

Corporate liquidity risk serves to measure the company's ability to honor our financial commitments in situations of severe market stress and/or counterparty insolvency.

 

Market and credit risks are considered for the definition of corporate liquidity risk.

 

Metrics

The following market and credit risks for the definition of corporate liquidity risk are considered:

  1. A) Market risk (RME): measure of the possible variation in the power trading margin, understood as the difference between power sales revenue and power purchase expense, due to the variation in contracted power volumes and the energy price variation;
  2. B) Counter-party credit risk (CER): measure of the impact of possible default of the counter-party, understood as the revenue frustrated directly in contracts for the sale of energy (default) and indirectly by the unavailability of energy for resale in purchase contracts (performance);
  3. C) Corporate Liquidity Risk (RLC): measured by vertex "v", which indicates the break in the horizon of analysis performed according to market liquidity for trading each product marketed by the company.
Risco de Liquidez Corporativa (RLC)

Limits

Limits are defined for the local corporate liquidity risk, i.e., by vertex, and global for the portfolio horizon, based on Minimum Free Cash.