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PRYSMIAN GROUP | DIRECTORS’ REPORT
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RISK FACTORS AND UNCERTAINTIES
The policy of value creation that motivates the Prysmian Group has always been based on effective risk
management. Since 2012, by adopting the provisions on risk management introduced by the "Italian Stock
Exchange Corporate Governance Code for Listed Companies" (Corporate Governance Code), Prysmian has
taken the opportunity to strengthen its governance model and implement an advanced system of Risk
Management that promotes proactive management of risks using a structured and systematic tool to support
the main business decision-making processes. In fact, this Enterprise Risk Management (ERM) model,
developed in line with internationally recognised models and best practice, allows the Board of Directors and
management to consciously evaluate the risk scenarios that could compromise achievement of the strategic
objectives and to adopt additional tools able to anticipate, mitigate or manage significant exposures.
The Group Chief Risk Officer (CRO), designated to govern the ERM process, is responsible for ensuring,
together with management, that the main risks facing Prysmian and its subsidiaries are promptly identified,
evaluated and monitored over time. A special Internal Risk Management Committee (consisting of the
Group's Senior Management) also ensures, through the CRO, that the ERM process is developed in a
dynamic way by taking account of changes in the business, of needs and of events that have an impact on
the Group over time. The CRO reports periodically (at least twice a year) on such developments to the top
management. Please refer to the "Corporate Governance" section of this report for a discussion of the
governance structure adopted and the responsibilities designated to the bodies involved.
The ERM model adopted (and formalised within the Group ERM Policy which incorporates the guidelines for
the Internal Control and Risk Management System approved by the Board of Directors back in 2014) follows
a top-down approach, whereby it is steered by Senior Management and by medium to long-term business
objectives and strategies. It extends to all the types of risk/opportunity for the Group, represented in the Risk
Model - shown in the following diagram - that uses five categories to classify the risks of an internal or
external nature characterising the Prysmian business model:
Strategic Risks: risks arising from external or internal factors such as changes in the market
environment, from bad and/or improperly implemented corporate decisions and from failure to react
to changes in the competitive environment, which could therefore threaten the Group's competitive
position and achievement of its strategic objectives;
Financial Risks: risks associated with the amount of financial resources available, with the ability to
manage currency and interest rate volatility efficiently;
Operational Risks: risks arising from the occurrence of events or situations that, by limiting the
effectiveness and efficiency of key processes, affect the Group's ability to create value;
Legal and Compliance Risks: risks related to violations of national, international and sector-specific
legal and regulatory requirements, to unprofessional conduct in conflict with company ethical policies,
exposing the Group to possible penalties and undermining its reputation on the market;