Annual report and accounts 2012

Political risks

Severstal’s activities are primarily concentrated in Russia, and the CIS and with additional operations in North America, Europe, Africa, South America and Asia. Severstal has legal entities registered in various jurisdictions and the overall political climates in the countries of our operation differ significantly, as do limitations on business activities and assets expropriation; confiscation rules; monetary systems and their potential for negative change; and potential crisis factors. In addition, governments may establish new trade barriers, which could have a negative impact on our export or import operations. Other political risks that could affect our operations include potential conflicts, terrorist acts, social unrest, and the introduction of a state of emergency. Although to date none of these have directly affected our business, they could have an adverse impact on our business, financial position and operational results.

Mitigating factors:

  • The majority of our production facilities and business operations are located in regions and countries with stable political and social systems.
  • Severstal’s investment policy considers regional political risks.
  • All our operational and investment decisions imply proper on-going risk assessment and monitoring. In those countries experiencing political instability, we undertake additional risk mitigation measures, including specialised types of insurance against political risks.