26.1 Market risk

The market risk comprises the commodity risk, the interest rate risk, and the currency risk.

The main objective of market risk management in the PGE Capital Group is to maintain the risk resulting from the conducted commercial and financial activities at the acceptable level and to support the implementation of the business strategy as well as to maximise the Group’s value for shareholders.

The procedures implemented in the PGE Capital Group for the purpose of  managing individual categories of market risk relating to commercial and financial activities trading and financial activities specify, among other things:

• the purpose, scope and principles of risk management;
• scopes of responsibility for risk management;
• management and operational processes within the framework of risk management for commercial activities in the electricity and related products markets and for financial activities;
• the ways of identifying sources of risk exposure;
• the methods for measuring and monitoring risk exposure.

The market risk management principles implemented in the PGE Capital Group further define how the appetite for market risk is determined, how market risk exposures are limited based on the measures of Profit-at-Risk and Value-at-Risk and the mechanisms for hedging risk when limits are exceeded.