Performance Management

Correlation Between Risk Management and Insurance

The Company considers insurance to be one of the risk management measures. In terms of risk management insurance is a way of transferring a risk. Insurance is used for low-probability risks, which impact on the Company might be significant, as well as in the cases stipulated in the legislations.

The Company's risks that are addressed through insurance

The Company's insured risks in 2011

Justification

Civil responsibility for nuclear or radiation damage.

Compulsory insurance.

Risk of loss or damage to the Company's cargo (including empty PSPs and PSPs containing uranium products).

The Company bears this risk under all contracts until the customer's delivery point according to the established business practice. The ratio of the risk value (product of probability by potential loss) and insurance premium proves that it is appropriate to insure this risk.

Credit risk of contractors – customers ordering the Company's products (entrepreneurial risk) – probability of failure of the Company's contractors to fulfill monetary obligations towards the Company.

The Company has been insuring this risk since 2009 since it worsened during the global economic crisis. The Fukushima accident increased the probability of this risk. The probability of the default of the Company's contractors is estimated based on their credit ratings. Asset payments – measuring the value of this risk and insurance premium proves advisability of insuring this risk when obtaining the right for insurance compensation after 60 days of waiting period of fulfilling a payment obligation by the Company's contractors.