25.1 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 protect financial results, maintain the risk resulting from the conducted commercial and financial activities at the acceptable level and support the implementation of the business strategy as well as 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 specify, among other things:

• the purpose, scope and principles of risk management;
• the 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, as well as for financial activities,
• the ways of identifying sources of risk exposure;
• acceptable instruments for hedging risk exposure;
• the methods for measuring and monitoring risk exposure.

The market risk management principles in force in the PGE Capital Group further define how the appetite for market risk is determined, how market risk exposures are limited and the mechanisms for hedging exposure when limits are exceeded.