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Cemig Generation and Transmission

Cemig Distribution

Management of Risks

Cemig operates in environments in which factors such as consolidation of the sector, globalization, technology, regulation, restructurings, market variations and competition create uncertainties.  Thus it becomes necessary to make precise estimates of the probability of occurrence of various potential events and their effects on the associated results of the business.

We seek to achieve alignment with Cemig’s Strategic Planning, which has set the strategic objectives of the Company’s business processes.  Taking the strategic objectives as a starting point, risks that might have adverse effects for the objectives if they were to materialize are identified.

We highlight the main principles that guide consolidation of Cemig’s corporate risk management:

  • Reduction of unacceptable volatility in performance.
  • The aim to replace the approach to risk management via organizational ‘silos’ with a vision guided by the structure of the processes of the corporate value chain.
  • Maximization of investors’ and other stakeholders’ confidence in the company.
  • Conformity with the highest levels of corporate governance, including the requirements of compliance and the Sarbanes-Oxley Law.
  • Provision of rapid and effective responses in the event of change in the business environment.
  • Alignment of the entrepreneurial strategy with the corporate culture.

The method of risk quantification used was put in place by PriceWaterhouseCoopers in 2003, and since then has been improved by the Corporate Risk Management Unit, adapting it to the Company’s culture, processes and needs, and also to best risk management practices suggested by ISO 31000:2009 and by the COSO-ERM integrated framework. In 2012 a new system (with SAP’s GRC Risk Management and Process Control solutions) – was put in place to support the development of the process, principally for correlation of process and macro-process risks, enabling them to be consolidated at higher levels of the organization.


The Corporate Risk Management Unit is responsible for preparation and supply of corporate-level methodology to be used for mapping and managing risks in each business area throughout the company.  It also provides advisory support and gives specific risk-related training to people in the business units when necessary.

Cemig also maintains a Corporate Risk Management Committee (CMRC) comprising representatives of all the Chief Officers’ Departments. This committee has the following duties:

(I)      to analyze and to propose to the Executive Board priority actions dealing with the risks categorized as ‘critical’, in the final exposure matrix;

(II)     to evaluate and permanently monitor Cemig’s appetite for risks, considering its mission and with a view to guaranteeing compliance with the objectives set out in the strategic map of each business area; and

(III)   to submit operational mechanisms, for approval by the Executive Board, that are aligned with the Company’s Long-term Strategic Plan, for strategic monitoring of the corporate risks identified, and effective actions to reduce financial exposure and intangible impacts to an acceptable level, taking into account the existing mitigating action plans. These items are first validated by the Executive Board, which then reports to its superior level of authority, the Board of Directors.

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