Corporate responsibility from a risk management perspective relates to effective and transparent corporate governance and management, people, nuclear safety and environment. Besides putting Fennovoima's reputation, and even operations, at risk, a breach of law or regulations could cause serious harm to society overall. As a responsible member of society, and complying with the regulatory requirements as well as Fennovoima’s policies, Fennovoima's activities and decision-making are characterized by a low risk appetite.
The aim of Fennovoima’s risk management is to support the achievement of the set objectives and prevent negative effects in all areas of Fennovoima’s operations and to enhance safety, quality and security of operations, economic value creation, corporate responsibility, and cooperation and dialogue with stakeholders. This is done by identifying risks as early as possible, and by actively taking corrective and preventive measures.
Integrated risk management approach
Fennovoima applies the so-called “integrated risk management approach,” where strategic, financial and operational and safety-related risks are integrated in an effective way (this approach is also promoted in e.g. IAEA TECDOC 1209). Fennovoima’s entire organization is involved in risk management, which, however, is coordinated centrally. This allows the organization to use the best possible risk management and know-how in each area, as well as systematic methods and practices.
Since a significant part of the project’s risks is in the hands of the plant supplier, Fennovoima ensures that the supplier’s risk management is conducted in accordance with Fennovoima’s requirements.
Efficient risk management
Fennovoima's risk management covers all phases of the Hanhikivi 1 project. Risk monitoring ensures that existing risks and newly discovered risks are effectively managed. Existing risks as well as the success of risk treatment are continuously followed and reported as part of Fennovoima’s monthly reporting.
Nuclear and radiation safety: As a nuclear power company, Fennovoima puts nuclear and radiation safety first in all of its activities and decision-making. Nuclear and radiation safety comprises safety, security, emergency arrangements and nuclear safeguards at all stages of the use of nuclear energy.
YVL Guides set requirements for the overall use of Probabilistic Safety Assessment (PSA) for analysis of nuclear safety. PSAs are integrated into risk assessment of nuclear safety-related risks and the overall risk management process. The same also applies to radiation safety risks.
Occupational health and safety: Fennovoima has set a target of zero accidents for its operations. Occupational accidents and diseases shall be prevented by proactive measures. Efficient risk management is one of the most efficient tools to ensure the fulfilment of the target. Fennovoima, as the Project Owner, ensures that occupational health and safety risks have been eliminated or mitigated, and construction work is executed safely without endangering the health of employees.
Environmental affairs: In order to ensure the prevention and mitigation of the environmental impacts of its operations, Fennovoima sets high standards for its environmental management activities. Risk management is to be integrated with each operation that may have impacts on the environment.
Quality: In order to ensure safety, Fennovoima sets high standards on the quality of its activities. The quality criteria for activities and products are set according to their significance with regard to safety.
According to YVL requirements (e.g. A.7 301), the strictest quality requirements are assigned to products and functions with the highest risk significance. Thus, risk mitigation and control measures are reflected in the quality requirements. Quality affects the project mostly through safety, technical performance or other aspects ultimately affecting licensability, schedule, costs or plant features.
Security: Corporate security ensures the security of operations, information security, personnel security, physical security, crime prevention, fire protection and preparedness. It also discusses business continuity planning as well as crisis management. YVLs (A.12) require that Fennovoima has an information security management system in place, including specific information security risk assessment and management.
The most significant financial risks
The most significant financial risks in the nuclear power plant’s development and construction phase are related to cost overruns, the availability and cost of debt financing, as well as any delays in commissioning the plant.
Fennovoima has a fixed price, turn-key contract with RAOS Project Oy (the plant supplier) with regard to the planning, implementation and commissioning of the Hanhikivi 1 nuclear power plant. The plant supplier is therefore responsible for the delivery in its entirety, having limited interfaces with Fennovoima’s responsibilities. Fennovoima’s responsibilities are mainly related to preparatory work at the plant site.
The availability and cost of debt typically have a significant impact on the economic viability of nuclear power projects. REIN, which is the plant supplier through its subsidiary RAOS Project and a significant minority shareholder of Fennovoima, has, on the basis of the shareholders’ agreement, committed to procuring the necessary debt financing for the project during the construction phase. According to REIN’s plan, the major part of the project’s financing will be received from Russia, and in connection with this, in 2015, the company signed a long-term loan agreement with REIN for EUR 2.4 billion. Due to fluctuations in the exchange rate with the ruble, it is now known that the maximum amount of the above-mentioned loan agreement will not be fully realized.
However, economic sanctions, as well as a number of other factors, can affect the ability of Russian government, Russian banks, and other financial and/or export credit agencies providing financing for the project, to provide the related guarantees or achieve the desired interest rates of the debt financing.
The most significant risks which could cause the delay of the power plant’s commissioning are connected with the Construction License application and the progress of the project’s construction phase. Fennovoima has identified risks related to the operations, organization, resources and subcontractors of RAOS Project Oy, which can delay the overall schedule. Fennovoima has ensured against the risks connected with the Construction License application by developing its own procedures and staff and assisting in the preparation of the licensing documentation. Fennovoima has introduced supply chain evaluation and approval procedures as part of the supply chain risk management.