Risk management

for all financial reporting in a regulatory context. The Investor Relations Department is responsible for specific re-

porting applicable to companies having listed debt instruments.

As regards the financial reporting process, the tasks and responsibilities of all employees in the Accounting Department have been clearly defined with a view to producing financial results that accurately and honestly reflect ELIA TRANSMISSION BELGIUM’s financial transactions. A detailed framework of tasks and responsibilities has been drawn up to identify the main control duties and the frequency with which tasks and control duties are performed.

An IFRS Accounting Manual is used by all entities within the scope of consolidation as a reference for accounting principles and procedures, thus ensuring consistency, comparability and accurate accounting and reporting within the Group.

The Finance Department has the appropriate means (including IT tools) to perform form its tasks; all entities within the scope of consolidation use the same ERP software, which has a range of integrated controls and supports task separation as appropriate. ELIA TRANSMISSION BELGIUM also clarifies the roles and responsibilities of all its employees by providing a description of each job in line with the Business Process Excellence methodol-

ogy.

Competencies

With a view to ensuring its various activities are performed reliably and effectively, ELIA TRANSMISSION BELGIUM clearly spells out the vital importance of its employees’ competencies and expertise in its recruitment, training and retention procedures. The Human Resources Department has drawn up the appropriate policies and defined all jobs in order to identify the relevant roles and responsibilities as well as the qualifications needed to fulfil them.

ELIA TRANSMISSION BELGIUM has drawn up a policy for the management of generic and specific competencies in line with the company’s values, and promotes training so as to enable all its employees to effectively perform the tasks allocated to them. Requirements with regard to competency levels are continually analysed by means of formal and informal self-assessments at various stages of an employee’s career.

Training programmes on financial reporting are offered to all employees involved directly or indirectly with that task. The training emphasises the existing regulatory framework, accounting obligations and actual activities, with a high level of understanding enabling participants to address the appropriate issues.

3.2 Risk management

Risk management is another internal control system that is crucial in helping ELIA TRANSMISSION BELGIUM to achieve its strategic objectives as defined in its mission. The Audit Committee, the Board of Directors and the Risk Manager jointly and regularly identify, analyse and assess key risks. The risks are assessed qualitatively and/or quantitatively depending on their nature and potential effect. The Risk Manager then makes recommendations on how best to manage each risk considering the close interaction of ELIA TRANSMISSION BELGIUM’s entire risk universe. Based on this assessment, preventive, remedial and/or corrective actions are implemented, including the strengthening of existing internal control activities where applicable.

As part of its responsibilities, ELIA TRANSMISSION BELGIUM’s Executive Board establishes an effective internal

control system to ensure, among other objectives, accurate financial reporting. It emphasises the importance of risk management in financial reporting by taking into account, with the Audit Committee, a whole range of associated activities and risks. It ensures that risks are truly reflected in financial results and reports. In addition, Risk Management goes beyond those risks known to ELIA TRANSMISSION BELGIUM and tries to anticipate the nature and characteristics of emerging risks, which may impact ELIA TRANSMISSION BELGIUM’s objectives. Financial risk assessments primarily involve the identification of:

1. significant financial reporting data and its purpose; 2. major risks involved in the attainment of objectives; 3. risk control mechanisms, where possible.

Financial reporting objectives include (i) ensuring financial statements comply with generally accepted accounting principes ; (ii) ensuring that the information presented in financial results is per both transparent and accurate; (iii) using accounting principles appropriate to the sector and the company’s transactions; (iv) ensuring the accuracy and reliability of financial results. The activities undertaken by ELIA TRANSMISSION BELGIUM, as an electricity transmission system operator in relation to its physical installations, held by Elia Asset, contribute significantly to its financial results.

Therefore, appropriate procedures and control systems have been established to ensure an exhaustive and realistic inventory of physical installations. Risk management is a company-wide activity, actively supported by the delegation of relevant responsibilities to all employees as part of their specific activities, as defined in the Policy.

Continuous assessment

Employing a simultaneously top-down and bottom-up approach enables ELIA TRANSMISSION BELGIUM to identify and, where possible, anticipate forthcoming events and react to any incidents occurring inside or outside the organisation which might affect the attainment of objectives.

Top-down approach based on strategic risks

ELIA TRANSMISSION BELGIUM’s strategic risk assessments are reviewed on a quarterly basis in the Audit Committee. Action plans or specific, theme-based risk assessments are carried out whenever there is a perception of potential threats or opportunities.

Bottom-up approach with regard to business

With a view to identifying new risks or evaluating changes in existing risks, the Risk Manager and the Executive Board remain in contact and look out for any changes that may call for the relevant risk assessment and associated action plans to be amended. Various criteria are used to determine the need to re-evaluate financial reporting procedures and associated risks.

Emphasis is put on risks associated with changes in the financial and regulatory context, industrial practices, accounting standards and corporate developments such as mergers and acquisitions.

Operational management assesses the relevant risks and puts forward action plans. Any significant changes to assessment rules must be approved by the Board of Directors, based on a recommendation of the Audit Committee. Risk Management is instrumental for ELIA TRANSMISSION BELGIUM to maintain its value for stakeholders