Our vision: JSC «Kazakhtelecom» is a socially and environmentally responsible company that creates value for all stakeholders, aiming to increase the efficiency of its contribution to Kazakhstan's achievement of the UN Sustainable Development Goals.

Risk-oriented approach to sustainable development

The Company’s identifies its risks on the annual basis ande reflects the results in the Risk Register and Risk Map approved by the Board of Directors. The Risk Register includes risks that may affect the achievement of long-term strategic goals and key performance indicators of the Development Plan. Key risks and risk mitigation measures taken in 2023 can be found in the Integrated Annual Report 2023.

To ensure preventive risk management measures, the Company identified the following emerging risks.

С-4 "Reduction of the share of the Kazakhtelecom JSC group in the telecommunications market"-Economic

Risk describes potential threats associated with the loss of a company's competitive position in the industry. This may be caused by:

1. The negative impact of regulations - new legislative initiatives that may limit the company's capabilities;

2. Increased competition - the emergence of new players in the market or aggressive strategies of existing competitors;

3. Decline in demand - changes in consumer preferences or economic factors affecting the consumption of telecommunications services;

4. Technological changes - the development of new technologies that may change the market structure and customer preferences.

Impact

1. Decrease in revenue;

2. Decrease in market capitalization;

3. Loss of clients;

4. Decrease in competitiveness and others.

Mitigating actions

To minimize the negative consequences of the risk of a decrease in the company's market share, the following measures can be implemented:

1. Analysis and monitoring of the competitive environment;

2. Improvement of customer service;

3. Maintenance of financial stability;

4. Development of new products and services;

5. Expansion of the range of services offered and others.

С-28 " Regulatory risk"-Geopolitical

Amendments to legislation that may restrict the activities of JSC "Kazakhtelecom" represent a potential impact from new or modified legal norms governing the telecommunications industry. These changes may pertain to the liberalization of the economy, licensing, tariff regulation, service quality obligations, and other key aspects affecting the company’s operational activities.

Impact

1. Decrease in revenue;

2. Increase in costs;

3. Loss of the mobile market;

4. Loss of access to wireless technology infrastructure for creating new products and developing existing ones;

5. Decrease in income in the operator segment, and others

Mitigating actions

1. Monitoring legislative changes;

2. Active participation in discussions of legislative initiatives and interaction with regulators to protect the company's interests;

3. Provision of SORM functionality in switching systems;

4. Collaboration with other telecommunications companies.

Process of Determining the Company's Risk Appetite

The definition and application of risk appetite, as well as the basic principles of its determination, are outlined in the Methodology for Calculating and Cascading the Risk Appetite of JSC "Kazakhtelecom," approved by the Board of Directors on January 13, 2010 (Protocol No. 1).

Aspects to Consider When Determining and Applying Risk Appetite:

1. The risk appetite of the Company should align with the vision of the shareholders and the expectations of stakeholders (e.g., key clients, suppliers, government, banks, rating agencies, etc.).

2. The risk appetite is determined with regard to the key strategic and operational goals of the Company. It should provide clear guiding principles for decision-making but should not contain detailed instructions or replace key performance indicators.

Formation of Risk Appetite

The risk appetite (statement of risk appetite) is formed by the Risk Department, taking into account the Company's own capacity to retain risk in relation to investment, financial, and operational activities in the context of creating, preserving, and realizing the value of the Company's assets. The parameters and indicators of risk appetite may be reviewed by the Company's Board of Directors, including upon the recommendation of the Risk Department.

Key Principles for Clear and Effective Determination of Risk Appetite:

1. Simplicity: Use simple expressions that are understandable to a wide audience, avoiding specialized terminology.

2. Practicality: Focus on the key aspects of the Company’s activities and its main risks.

3. Connection to Strategy: Define the desired approach to risk associated with achieving the Company’s strategic goals and protecting its core values.

4. Consideration of Opportunities: Take into account not only negative risks and their consequences but also opportunities for the Company.

5. Measurability: Include indicators and threshold values for measuring risk and preventing violations.

Risk Management Culture

The Company places special emphasis on the culture of risk management, as it helps to minimize losses, improve decision-making, and enhance the organization’s resilience to change. The risk management culture includes:

1. Regular risk management training for all non-executive directors.

2. Targeted training on risk management principles across the organization.

The Company conducts comprehensive training for all employees annually, as well as testing on knowledge of internal regulatory documents related to the risk management system and internal control system (hereinafter referred to as RMS and ICS). The training program and test questions are updated in accordance with the revision and/or development of relevant documentation for RMS and ICS, ensuring a high level of employee preparedness.

The results of the testing are submitted for consideration by the Risk Management Committee and are communicated to the Board of Directors as part of regular reporting. This allows for prompt responses to identified problem areas and improvements to internal processes. In addition, in 2023, a large-scale survey was conducted among employees of the Company—from department heads to the CEO—aimed at assessing the culture of risk management. This initiative reflects our commitment to continuous improvement and the engagement of all levels of management in risk management processes.