Annual report 2016

Strategy risks management system

Risks Associated with the Implementation of Strategic Priorities

Diversification

Financial risks / impact on KPIs

Launch of new products may lead to an increase in assets that are exposed to credit and market risks, which will adversely affect capital adequacy.

At the same time, product diversification opens up opportunities for managing interest-rate and liquidity risks, while also mitigating the concentration risk.

Non-financial risks /impact on KPIs

Moving to new technology applied to optimise the existing technologies and processes, as well as launching new products may lead to:

  • higher operational risks due to new products and processes being embedded into the existing infrastructure;
  • increased HR risks associated with the inability of existing personnel to fully meet the requirements of new technologies and new business processes;
  • the current system of controls being rendered ineffective, disrupting the operation of Moscow Exchange’s key systems and processes;
  • development of new products increases outer exposure of the company’s IT infrastructure, which increases the risk of interferences with the Exchange’s systems and determines new challeges to insure cybersecority of the company.
Optimisation

Financial risks / impact on KPIs

Business process optimisation in the area of risk management improves risk protection.

Non-financial risks /impact on KPIs

Moving to new technology applied to optimise the existing technologies and processes, as well as launching new products may lead to:

  • higher operational risks due to new products and processes being embedded into the existing infrastructure;
  • increased HR risks associated with the inability of existing personnel to fully meet the requirements of new technologies and new business processes;
  • the current system of controls being rendered ineffective, disrupting the operation of Moscow Exchange’s key systems and processes;
  • development of new products increases outer exposure of the company’s IT infrastructure, which increases the risk of interferences with the Exchange’s systems and determines new challeges to insure cybersecority of the company.
Development of risk and collateral management products

Financial risks / impact on KPIs

Development of risk and collateral management methods and technologies results in stricter requirements for financial risk assessment models in terms of their accuracy and reliability and also improves risk protection.

Non-financial risks /impact on KPIs

Moving to new technology applied to optimise the existing technologies and processes, as well as launching new products may lead to:

  • higher operational risks due to new products and processes being embedded into the existing infrastructure;
  • increased HR risks associated with the inability of existing personnel to fully meet the requirements of new technologies and new business processes;
  • the current system of controls being rendered ineffective, disrupting the operation of Moscow Exchange’s key systems and processes;
  • development of new products increases outer exposure of the company’s IT infrastructure, which increases the risk of interferences with the Exchange’s systems and determines new challeges to insure cybersecority of the company.
Deepening the market

Financial risks / impact on KPIs

Market deepening through expansion of the investor base may potentially increase the credit risk level, especially in view of the expected rise in assets that are exposed to credit risk.

At the same time, attracting new investors will enable the Company to better manage the liquidity risk and mitigate the concentration risk of exposure to individual counterparties.

Non-financial risks /impact on KPIs

Attracting new investors (including individuals) may result in higher operational risks due to new products and processes being embedded into the existing infrastructure.

Standardisation of Russian infrastructure

Financial risks / impact on KPIs

Non-financial risks /impact on KPIs

Gradual alignment of the Russian financial market infrastructure with international recommendations imposes financial and non-financial risks due to foreign investors being granted access to trading and clearing platforms.

Other risks concern the inability to effect changes in legislation and/or obtain the regulator’s approval.