The investment risk refers to the risk of a temporary or permanent loss of capital resulting directly or indirectly from fluctuations in the market prices of the foundation's investments. Taking this into account, the risk management of the foundation primarily aims to ensure that the risks of the earnings portfolio are balanced, to anticipate and handle the concentration risks in the portfolio, to assess the correlation risks between the investments and in general to ensure the quality of the assets. Sustainable portfolio management based on ESG criteria can help to avoid extreme risks (known as “tail risks”).
The coverage risk reflects the possibility that the funds provided are insufficient or only partially sufficient to cover the costs of nuclear waste disposal or are not available in a timely manner. This risk is monitored by regularly recording and monitoring the investments, the payment profiles and the overall level of disposal costs. For this purpose, an ALM study is performed at regular intervals, along with long-term financial and economic planning, which is performed on an annual basis. In addition, the foundation stays in close contact with the responsible ministries in order to be informed about new developments at an early stage and, if necessary, to develop countermeasures on this basis.
The operational risks arising from business operations describe the risk of unexpected loss or damage caused by human behaviour, technical failure, weaknesses in processes or control, or by external factors. In this area, KENFO pursues the strategy of minimizing operational risks by means of adequate governance, robust processes, and professional management of the foundation's operations. Selecting experienced and specialized outsourcing partners is another element that assists in this objective. In addition, as a foundation under public law, KENFO is embedded in the state sector and uses the applicable public law regulations to create certainty of action, thereby further limiting operational risks.
KENFO attaches great importance to managing its reputational risks in an appropriate way. This is done in the portfolio by using the ESG approach described above, which limits reputational risks as well as investment risks. There is also a powerful compliance management system that addresses conflicts of interest and helps to avoid reputational risks that result from non-compliance with regulations.